Question
Memorial Hospital is considering the purchase of a new x-ray machine. Current interest rates are 10%. The hospital's managers forecast that the operation of the
Memorial Hospital is considering the purchase of a new x-ray machine. Current interest rates are 10%. The hospital's managers forecast that the operation of the new machine would produce the following stream ofrevenues(in thousandsof dollars) over 5 years in the future, wherenis the number of years in the future:
n = 0n = 1n = 2n = 3n = 4n = 5-$500$100$120$150$180$250
Now suppose that the hospital's managers realize that the payments they will receive for providing the x-ray services will be higher than originally expected in the table above.Higher paymentsshould cause thepresent value of the benefitsof this investment to ____ and thenet present valueof the investment to ____.
Group of answer choices
decrease; decrease
increase; decrease
decrease; increase
increase; increase
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