3. Capital Budgeting A. A hospital is considering the purchase of a piece of medical equipment that costs $1,500,000 and has a useful life of five years and no salvage value at the end of its useful life. The equipment generates revenues of $650,000 per year and operating expenses of $300,000. Calculate NPV, payback, BCR, and IRR, should the equipment be purchased if the discount rate is 6% or 10%? RevenueExpense $1,500,000 (investment) ear Year 1 ear ear Year 4 ear $650,000 $650,000 $650,000 $650,000 $650,000 $300,000 $300,000 $300,000 $300,000 $300,000 B. A hospital is considering the purchase of a piece of medical equipment that costs $1,500,000 and has a useful life of five years and a salvage value of $250,000 at the end year five. The equipment generates revenues of $450,000 per year and operating expenses of $200,000. Calculate NPV, payback, BCR, and IRR, should the equipment be purchased if the discount rate is 6% or 10%? RevenueExpense $1,500,000 (investment) ear Year 1 ear ear Year 4 ear $450,000 $450,000 $450,000 $450,000 $450,000 $200,000 $200,000 $200,000 $200,000 $200,000 C. Assume revenues decrease and expenses increase with the age of the machine as given in the table below and it can be sold for $200,000 at the end of year five. Calculate NPV, payback, BCR, and IRR, should the equipment be purchased if the discount rate is 6% or 10%? Revenue Expense $1,500,000 (investment) ear Year 1 ear ear ear Year 5 $850,000 $750,000 $650,000 $550,000 $450,000 $200,000 $250,000 $300,000 $350,000 $400,000