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Please show correct answers and comlete work in same format. Brooks Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A
Please show correct answers and comlete work in same format.
Brooks Clinic is considering investing 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 company's cost of capital is 5%. Compute the (1) net present value, (2) profitability index, and (3) internal rate of return for each option. (If the net present value is negative, use either a negative sign preceding the number eg -45 or parentheses eg (45). Round answers for present value and IRR to 0 decimal places, e.g. 125 and round profitability Index to 2 decimal places, e.g. 10.50. For calculation purposes, use 5 decimal places as displayed In the factor table provided.)Step by Step Solution
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