Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Lease analysis Generic Hospital has decided to invest in an Intuitive Robot called the DaVinci.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 $ 1,922,633.00 Down Payment $ 250,000.00 Lease Term (years) 5 Interest Rate 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 hospitalfor $200,000. During the time period, it has been determined that the variouscosts 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Health And Safety Environment And Quality Audits A Risk Based Approach

Authors: Stephen Asbury

4th Edition

1032427574, 978-1032427577

More Books

Students also viewed these Accounting questions

Question

Relational Contexts in Organizations

Answered: 1 week ago