Exercise 19.11 NPV OBJECTIVE 13 A clinic is considering the possibility of two new purchases: new MRI equipment and new biopsy equipment. Each project requires an investment of $425,000. The expected life for each is five years with no expected salvage value. The net cash inflows associated with the two inde- pendent projects are as follows: Chapter 19 Capital Investment Year MRI Equipment Biopsy Equipment S200,000 100,000 150,000 100,000 50,000 S 50,000 50,000 100,000 200,000 237,500 Required: Compute the net present value of each project, assuming a required rate of 12 percent. OBJECTIVE 2 Exercise 1912 Payback, Accounting Rate of Return Refer to Exercise 19.11 1. Compute the payback period for each project. Assume that the manager of the clinic accepts only projects with a payback period of three years or less. Offer some reasons why this may be a rational strategy even though t cate otherwise e NPV computed in Exercise 19.11 may indi- 2. Compute the accounting rate of return for each project