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CMU Clinic is considering new lab equipment. The equipment will allow CMU to do in-house several test that are currently contracted out. This will result

CMU Clinic is considering new lab equipment. The equipment will allow CMU to do in-house several test that are currently contracted out. This will result in annual savings of $45,000. The equipment will cost $200,000 and require $16,000 annually to maintain. The economic life of the equipment is 8 years and it can be depreciated over its economic life using the straight-line method. The equipment will have no salvage value at the end of 8 years. CMU's investments are currently earnings 12%. Should CMU purchase the equipment? At a minimum, calculate the ARR, NPV, and IRR to assist you in your decision. What other information would be helpful in making your decision.

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