PV A clinic is considering the possibility of two new purchases: new MRI equipment and new biopsy equipment. Each project requires an investment of $421,900. 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 $208,000 $55,000 2 107,000 58,000 3 165,000 95,000 4 96,000 182,000 5 52,000 272,000 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 8 percent. If the NPV is negative, enter your answer as a negative value. NPV MRI equipment $fill in the blank Biopsy equipment $fill in the blank
PV A clinic is considering the possibility of two new purchases: new MRI equipment and new biopsy equipment. Each project requires an investment of $421,900. 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 $208,000 $55,000 2 107,000 58,000 3 165,000 95,000 4 96,000 182,000 5 52,000 272,000 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 8 percent. If the NPV is negative, enter your answer as a negative value. NPV MRI equipment $fill in the blank Biopsy equipment $fill in the blank
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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Question
NPV
A clinic is considering the possibility of two new purchases: new MRI equipment and new biopsy equipment. Each project requires an investment of $421,900. The expected life for each is five years with no expected salvage value. The net
Year |
MRI Equipment |
Biopsy Equipment |
| 1 | $208,000 | $55,000 |
| 2 | 107,000 | 58,000 |
| 3 | 165,000 | 95,000 |
| 4 | 96,000 | 182,000 |
| 5 | 52,000 | 272,000 |
The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems.
Required:
Compute the
| NPV | |
| MRI equipment | $fill in the blank |
| Biopsy equipment | $fill in the blank |
Expert Solution
Step 1
Given that
Cash outflows for each project = $421,900
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