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Ivanhoe Clinic is considering imvesting in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a

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Ivanhoe Clinic is considering imvesting in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to have a salvage value at the end of its useful life. The following estimates were made of the cash flows. The conpany's cost of capital is 5%. Ivanhoe Clinic is considering imvesting in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to have a salvage value at the end of its useful life. The following estimates were made of the cash flows. The conpany's cost of capital is 5%

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