NPVA clinic is considering the possibility of two new purchases: new MRI equipment and new biopsy equipment. Each project requires an investment of $437,200. The expected life for each is five years with no expected salvage value. The net cash inflows associated with the two independent projects are as follows:YearMRI EquipmentBiopsy Equipment1$214,000 $60,000 290,000 42,000 3173,000 94,000 4109,000 199,000 546,000 271,000 The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems.Required:Compute the net present value of each project, assuming a required rate of 12 percent. If the NPV is negative, enter your answer as a negative value. NPV MRI equipment$fill in the blank 1Biopsy equipment$fill in the blank 2

Answered: A clinic is considering the possibility…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 10E: Roberts Company is considering an investment in equipment that is capable of producing more...

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NPV

A clinic is considering the possibility of two new purchases: new MRI equipment and new biopsy equipment. Each project requires an investment of $437,200. The expected life for each is five years with no expected salvage value. The net cash inflows associated with the two independent projects are as follows:

Year	MRI Equipment	Biopsy Equipment
1	$214,000	$60,000
2	90,000	42,000
3	173,000	94,000
4	109,000	199,000
5	46,000	271,000

The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems.

Required:

Compute the net present value of each project, assuming a required rate of 12 percent. If the NPV is negative, enter your answer as a negative value.

	NPV

MRI equipment	$fill in the blank 1
Biopsy equipment	$fill in the blank 2

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net present value = -initial investment+ present value of future cashflow

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