Use the Information for the Question(s) Below

Use the information for the question(s) below.
St. Martin's Hospital plans to purchase or lease a $2 million CT scanner. If purchased, the CT scanner will be depreciated on a straight-line basis over five years, after which it will be worthless. If leased, the annual lease payments will be $500,000 per year for five years. St. Martin's borrowing cost is 8%, and its tax rate is 35%.
-What is the amount of the lease-equivalent loan for the CT Scanner?

A) $74,890.28
B) $1,749,890.28
C) $3,487,027.19
D) $2,367,559.51

Correct Answer:

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