Keating Hospital is considering two different low-field MRI systems: the Clearlook System and the Goodview System. The projected annual revenues, annual costs, capital outlays, and project life each system (in after-tax cash flows) are as follows:

	Clearlook	Goodview
Annual revenues	720,000	900,000
Annual operating costs	445,000	655,000
System investments	900,000	800,000
Project Life	5 years	5 years

Assume that the cost of capital for the company is 8 percent.

Required:

1. Calculate the NPV for the Clearlook System.

2. Calculate the NPV for the Goodview System. Which MRI system would be chosen?

3. What if Keating Hospital wants to know why IRR is not being used for the investment analysis? Calculate the IRR for each project and explain why it is not suitable for choosing among mutually exclusive investments.