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
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
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 2CE
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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
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
Required:
Compute the
NPV | |
MRI equipment | $fill in the blank 1 |
Biopsy equipment | $fill in the blank 2 |
Expert Solution
Step 1
net present value = -initial investment+ present value of future cashflow
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