Years are listed 0 to 5 years.

48 Problem 5 49 What is the payback period for problem 3? 50 51 Payback period Year before recovery Year before cummulative cash flow/cash flow for year paid off 52 Payback period (show calculation) 53 Payback period (show answer) 54 5. Penn Medical Center, a for proft hospital, is considering the purchase of a new 64 slice CT scanner. The cost of the new scanner is $4 million and will be depreciated over 10 years on a straight line basis to $0 savage value. The tax rate is 40% The financing options include either borrowing the full cost of the nner or leasing a scanner. The lease option is a five-year lease with equal before-tax lease payments of $975.000 per year. The borrowing alternative is a five-year loan covering the entire cost of the scanner at an interest rate of 5%. The after-tax cost of debt is 3% Should Penn Medical lease the equipment or borrow the money