Initial investment of $100,000 in a new medical equipment. Interest Rate 10% (Borrowed money from a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Initial investment of $100,000 in a new medical equipment. Interest Rate 10% (Borrowed money from a bank). Item Investment Expected Cash Flow PV Factor (1+r) DCF or PV PV (Yr. 1 to 5) + Year 0 100,000 -100,000 Year 1 20,000 Year 2 30,000 Less Investment: NPV Year 3 30,000 $ Year 4 40,000 Year 5 50,000 1. Payback Period Exercise: MRI purchase . . . Initial investment = Annual net cash flow Payback period = Calculation: Answer: $500,000 = $250,000 Investment Amount Net Annual Cash Flow before Taxes 2. Average Rate of Return (ARR) Exercise: MRI Purchase Example . Average Rate of Return = Calculation: Average net income per year Average investment amount = ($510,000 +- $10,000)/2 = $250,000 Answer: = $150,000 Average Net Income Average Investment Amount Initial investment of $100,000 in a new medical equipment. Interest Rate 10% (Borrowed money from a bank). Item Investment Expected Cash Flow PV Factor (1+r) DCF or PV PV (Yr. 1 to 5) + Year 0 100,000 -100,000 Year 1 20,000 Year 2 30,000 Less Investment: NPV Year 3 30,000 $ Year 4 40,000 Year 5 50,000 1. Payback Period Exercise: MRI purchase . . . Initial investment = Annual net cash flow Payback period = Calculation: Answer: $500,000 = $250,000 Investment Amount Net Annual Cash Flow before Taxes 2. Average Rate of Return (ARR) Exercise: MRI Purchase Example . Average Rate of Return = Calculation: Average net income per year Average investment amount = ($510,000 +- $10,000)/2 = $250,000 Answer: = $150,000 Average Net Income Average Investment Amount
Expert Answer:
Answer rating: 100% (QA)
Net Present Value NPV is a financial metric used to evaluate the profitability of an investment or p... View the full answer
Related Book For
Calculus For Business, Economics And The Social And Life Sciences
ISBN: 9780073532387
11th Brief Edition
Authors: Laurence Hoffmann, Gerald Bradley, David Sobecki, Michael Price
Posted Date:
Students also viewed these finance questions
-
A bag contains 10 balls of which 7 are green and 3 are white. A ball is picked at random from the bag and its colour is noted. The ball is not replaced. A second ball is then picked out. Using a tree...
-
Draft up a 1-2 pag memo to a manager, the Head of Early Talent Recruiting at Beta Company, outlining a proposed recruitment and communications strategy at CUNY York college. The memo should include...
-
Scenario Frantisek Precision Engineering plc (FPE) is an engineering company which makes tools and equipment for a wide range of applications. FPE has 12 operating divisions, each of which is...
-
Give a recursive algorithm for finding the reversal of a bit string. (See the definition of the reversal of a bit string in the preamble of Exercise 34 in Section 5.3.)
-
A semicircle of radius is in the first and second quadrants, with the center of curvature at the origin. Positive charge + Q is distributed around the left half of the semicircle (0 to 90 degrees)...
-
Ashes Divide Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.8 percent, and a current price of $924. The bonds make semiannual payments. The coupon rate on these bonds...
-
CK Ltd was incorporated on 15 December 2009 with an authorized capital of 200,000 ordinary shares of 0.20 each to acquire as at 31 December 2009 the business of CK, a sole trader, and RP Ltd, a...
-
Goose down is used in a wide variety of products, including jackets, bedding, and pillows. In recent years, the cost of down has been increasing. For example, in October 2010, Lands End, a retailer...
-
XYZ Company has the following data: Budgeted Production 1,200 units Budgeted fixed overhead P120,000 Direct labor standard per unit 1.5 hours @ P50 per direct labor hour Direct material standard per...
-
This project will test your understanding of the Sage 50 Accounting application and your ability to apply the features of this application. You will be using many of the skills that you have acquired...
-
Puget Sound Divers is a company that provides diving servicessuch as underwater ship repairs to clients in the Puget Sound area.The company??s planning budget for May appears below:Puget Sound 2...
-
As a Dedicated Service Assistant in the Jockey Club Retail and Telephone Registration Department, How the performance information is gathered and reason why by using a 360-degree performance...
-
The reaction of a-pinene oxide with aqueous acid includes a complex rearrangement. What would the reaction look like if a simpler molecule-cyclohexene oxide - reacted with aqueous acid and no...
-
Forrett Company borrowed $100,000 on October 1, 2023, by signing a $100,000, 8%, 4-month note. Required: Record the issuance of the note, the adjusting journal entry for year-end on 12/31/23, and the...
-
What are the salient considerations in the selection of an appropriate team/team members for IT-driven? transformational project? What could Dr. Banerjee have done differently to make the project...
-
Determining the exact concentration of HC1. Based on the information below, what can you conclude about this lab? What is the deviation? Results: THAM molar mass: 121.1 g/mol Sample 1 Sample 2 Sample...
-
(Capital structure analysis) The Karson Transport Company currently has net operating income of $508,000 and pays interest expense of $210,000. The company plans to borrow $1.14 million on which the...
-
X-1 Find the domain of the function f(x) : x 1 2 - O (-00, -1) U (-1, ) O (-00, 1) U (1, ) O -00, -1) U (-1, 1) U (1, 0) O (- 1, 1)
-
At age 25, Tim starts making annual deposits of $2,500 into an IRA account that pays interest at an annual rate of 5% compounded continuously. Assuming that his payments are made as a continuous...
-
Graph the quadratic function f(x) = x 2 + 2x 8
-
In Exercises 1 through 22, find the critical points of the given functions and classify each as a relative maximum, a relative minimum, or a saddle point. f(x, y) = 5 x 2 y 2
-
Consider a model of a food chain of three species. Assume that each population on its own can be modeled by logistic growth. Let the species be labeled by \(x(t), y(t)\), and \(z(t)\). Assume that...
-
The Lorenz Model is a simple model for atmospheric convection developed by Edward Lorenz in 1963. The system is given by three equations: \[\begin{aligned} \frac{d x}{d t} & =\sigma(y-x) \\ \frac{d...
-
Show that the system \(x^{\prime}=x-y-x^{3}, y^{\prime}=x+y-y^{3}\), has at least one limit cycle by picking an appropriate \(\psi(x, y)\) in Dulac's Criteria.
Study smarter with the SolutionInn App