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Medical Experts Inc. is considering to contract an outside company to supply medical equipments for its clients. Medical Experts' managers want to make a decision

  • Medical Experts Inc. is considering to contract an outside company to supply medical equipments for its clients. Medical Experts' managers want to make a decision of choosing between two suppliers who will be contracted for a period of 4 years. The following are the details of the two options: Supplier Initial Investment Annual Cash Flow Period in years Supplier 1 $150,000 $50,000 4 Supplier 2 $100,000 $25,000 4 Required Marks a) Calculate the Payback period for each of the two options. 4 b) Calculate the internal rate of return of the two options. 6 c) Calculate the Net Present Value for each of the two options at the expected rate of return is 10%. 6 b) Comment on which supplier you think Medical Experts Inc. should choose. 2

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