Question
City hospital ,a nonprofit organization, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys
City hospital ,a nonprofit organization, estimates that it can save
$28,000 a year in cash operating costs for the next
10 years if it buys a special-purpose eye-testing machine at a cost of
$110,000. No terminal disposal value is expected.
City Hospital's required rate of return is
12%. Assume all cash flows occur at year-end except for initial investment amounts.
City Hospital uses straight-line depreciation.
Calculate the following:
-
Net Present Value
-
Payback Period
-
Internal Rate Of Return
-
Accrual accounting rate of return based on net initial investment
-
Accrual accounting rate of return based on average investment
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