The Atlantic Medical Clinic can purchase a new computer system that will save $7,000 annually in billingcosts. The computer system will last for eight years and have no salvage value.Required:Up to how much should the Atlantic Medical Clinic be willing to pay for the new computer system if theclinic’s required rate of return is:1. Sixteen percent?2. Twenty percent?

The Atlantic Medical Clinic can purchase a new computer system that will save $7,000 annually in billingcosts. The computer system will last for eight years and have no salvage value.Required:Up to how much should the Atlantic Medical Clinic be willing to pay for the new computer system if theclinic’s required rate of return is:1. Sixteen percent?2. Twenty percent?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 10PA: The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000,...

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The Atlantic Medical Clinic can purchase a new computer system that will save $7,000 annually in billing costs. The computer system will last for nine years and have no salvage value. Required: What is the maximum price (i.e., the price that exactly equals the present value of the annual savings in billing costs) that the Atlantic Medical Clinic should be willing to pay for the new computer system if the clinic's required rate of return is: (Round your final answer to the nearest whole dollar amount.) Maximum Price 1. Seven percent $ 49,164 2. Eleven percent $ 34,198
The Atlantic Medical Clinic can purchase a new computer system that will save $6,000 annually in billing costs. The computer system will last for six years and have no salvage value. Required: What is the maximum price (i.e., the price that exactly equals the present value of the annual savings in billing costs) that the Atlantic Medical Clinic should be willing to pay for the new computer system if the clinic's required rate of return is: (Round your final answer to the nearest whole dollar amount.) Maximum Price 1. Nine percent 2. Fourteen percent
The Atlantic Medical Clinic can purchase a new computer system that will save $7,000 annually in billing costs. The computer system will last for nine years and have no salvage value. Click here to view Exhibit 14B-1 and Exhibit 14B-2 to determine the appropriate discount factor(s) using tables. Required: What is the maximum price (l.e., the price that exactly equals the present value of the annual savings in billing costs) Atlantic Medical Clinic should be willing to pay for the new computer system if the clinic's required rate of return is: Note: Round your final answer to the nearest whole dollar amount. Maximum Price 1. Seven percent 2. Eleven percent
The Atlantic Medical Clinic can purchase a new computer system that will save $6,000 annually in billing costs. The computer system will last for seven years and have no salvage value. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. Required: What is the maximum price (i.e., the price that exactly equals the present value of the annual savings in billing costs) that the Atlantic Medical Clinic should be willing to pay for the new computer system if the clinic’s required rate of return is: (Round your final answer to the nearest whole dollar amount.) Maximum Price 1. Seven percent 2. Nine percent
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
The Ham and Egg Restaurant is considering an investment in a new oven that has a cost of $60,000, with annual net cash flows of $9,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether or not you would recommend that Ham and Egg invest in this oven.
Your landlord is planning to renovate the pool in your apartment. The New pool will cost 152,895 dollars, which will add money to you rent but will increase the revenue for your landlord by 54,500 at year 4 and 87325 at years 10. He calculates that the operational cost will be 13250. The poll has a salvage value of 68,560 after 8 years. a) At a discount rate of 12.45% find the present value of this plan b) draw a cash flow diagram and show if your land lord's plan is viable or not
Please solve correctly . You are considering purchasing a dump truck. The truck will cost $75,000 and have operating and maintenance costs that start at $18,000 the first year and increases by $2,000 per year. Assume that the salvage value at the end of five years is $22,000 and interest rate is 15%. What is the annual operation and maintenance costs of owning this vehicle?
Suppose that you have just completed the mechanical design of a high-speed automated palletizer that has an investment cost of $3,000,000. The existing palletizer is quite old and has no salvage value. The market value for the new palletizer is estimated to be $300,000 after seven years. One million pallets will be handled by the palletizer each year during the seven-year expected project life. What net savings per pallet (i.e., total savings less expenses) will have to be generated by the palletizer to justify this purchase in view of a MARR of 20% per year?
Use Annual Worth method to calculate the benefit/cost ratio at i = 6% for a new library. The first cost is $500K, and O&M costs are $100K per year. There is no salvage value after 30 years. Community benefits are estimated to be $130K per year. Is the library economically justified? Write a brief interpretation of your answer
A contractor is considering the following two alternatives: Purchase a new computer system for $45,000. The system is expected to last 6 years with a salvage value of $7,000. Lease a new computer system for $9,000 per year, payable in advance (at the start of the year). The system should last for 6 years. If a MARR of 6% is used, which alternative should be selected using a net present worth analysis? Which alternative would you select using an annualized cost method of analysis?
The hospital is considering the purchase of imaging equipment worth $25,000 to improve its visual capture results, and improve outcomes. The operating costs will be reduced by $7,000 per year. The computer has an estimated life expectancy of 5 years, and an estimated salvage value of $5,000. What is the profitability index if the discount rate is 8%. Ignore reimbursement considerations.