Capital Investment Decision

An imaging center is evaluating the expansion project. Alternative investment could be a 64-slice computed tomography (CT) system at $300,000 or an MRI machine at $400,000. The two options are mutually exclusive. Estimated net income are as follows:

Year 1 2 3 4 5 6 7 8 9 10 11 12

CT $20,000 30,000 40,000 50,000 50,000 50,000 50.000 40.000 30,000 30,000

MRI $30,000 35,000 45,000 50,000 55,000 60,000 60,000 55,000 50,000 40,000 30,000 30,000

The salvage value of the CT scan is $50,000 and $80,000 for the MRI machine. The current cost of capital of the imaging center is 6%. Which machine should the center invest? Why?