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Exercise 15.22 (excluding b) Amaro Hospital, a not-for-profit entity not subject to income taxes, is considering the purchase of new equipment costing $20,000 to achieve

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Exercise 15.22 (excluding b) Amaro Hospital, a not-for-profit entity not subject to income taxes, is considering the purchase of new equipment costing $20,000 to achieve cash savings of $5,000 per year in operating costs. The estimated useful life is 10 years, with no salvage value. Amaro's minimum expected return is 14 per cent. Required (a) What is the NPV of this investment? (c) What is the accrual accounting rate of return based on the initial investment? (d) What is the payback period? M from ACCT102 Formulas: C1 C2 Ct NPV = Co+ ( 1+ r) 1 + (1 + r) 2 + ... + ( 1 + r)t see also formula on p. 465 of Eldenburg et al

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