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Generic Hospital has decided to invest in an Intuitive Robot called the Da Vinci. It is a robotic surgery device that is less invasive than

Generic Hospital has decided to invest in an Intuitive Robot called the Da Vinci. It is a robotic surgery device that is less invasive than standard surgeries and consequently allows shorter healing times and shorter length of stay in a hospital. The following are the terms of a lease for the DaVinci Robot: Fair Market Value Down Payment Lease Term (years) Interest Rate 1,922,633 250,000 5 4% A) What are the yearly payments associated with the lease of the robot? As part of the financial planning process, we have determined that the robot will last 5 years and we will be able to sell it to a foreign country hospital for $200,000. During the time period, it has been determined that the various costs of supplies necessary to operate the machine will be 15% of the lease payments during the 1st two years and 20% for the final 3 years of the lease. During this lease period, working capital needed will be $250,000. B) Assuming that we are able to achieve sales of $1,000,000 per year and keep other overhead costs at the amount of $300,000 per year what is the net present value of the machine assuming a discount rate of 9%? Is the investment worth it (financially speaking)? C) How much interest did we pay over the life of the lease?

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