The Chicago Hope Hospital purchased a MRI machine for $5 million dollars, using a 6 year loan at 8% interest.

a. The above MRI machine which costs 5 million comes with a service charge for an additional amount of $20,000 each year for 5 years. What is the present value of cash flows for the MRI machine (use 8% as the discount rate)?

b. The salvage value of the machine is $100,000 five years from now. What is the present value of the salvage value of the MRI?