Question
Health Care System, CEO Mr. Baker is about to make a decision between two investment alternatives. First investment is to purchase a full body scanning
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Health Care System, CEO Mr. Baker is about to make a decision between two investment alternatives. First investment is to purchase a full body scanning Machine-A and second investment is to purchase a full body virtual graphics Machine-B. Mr. Baker has asked respective department to provide necessary information for evaluating the two machines. After some search, the department head produces necessary information for evaluationg the machines as follows:
Machine A | Machine B | |||
Initial Cost | $15,000 | $22,000 | ||
Operator cost per year | $2,200 | $4,000 | ||
Maintenance cost per year | $4,000 | $1,000 | ||
Salvage value | $2,400 | $7,000 |
It is also assumed that, a) the life of each machine is 3 years, and b) the company thinks it knows how to make 12% on investments no more risky than this one.
Therefore, the net present value (NPV) for Machine A=____(round your response to the nearest whole number and include a minus sign if necessary).
Therefore, the net present value(NPV) for Machine B=$___ (round your response to the nearest whole number and include a minus sign if necessary).
Using the net present value method as the basis of comparing the machines, Mr. Baker should recommend (Machine A or Machine B)
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