A hospital needs an Endoscopy Equipment. It can buy or lease the equipment

Alternative 1. The machine costs $180,000. Installation costs are $45,000.

The machine will be used for four years. Every year, there is a fixed annual cost of $100,000.

It is estimated that there will be 5000 procedures per year.

Each procedure costs $40 and brings in a revenue of $80

At the end of four years, there is a salvage value of $110,000.

Alternative 2. Lease the equipment

Lease cost per year

Revenues and Costs every year as before

Assume 4 years planning horizon. Should they buy or lease the machine?

i=10%

Determine the alternative to select?

Please solve the question using the Excel table below:

Unit Cost	$ 1,800,000
No. of Lithotripters	Cost	Depreciation per Year	Volume	Variable Cost	Fixed Cost Avg	Cost Per Unit	Total Cost
1
1
1
1
2