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Problem 24-3A (Part Level Submission) Brooks Clinic is considering investing in new heart-monitoring equipment It has two options. Option A would have an initial lower
Problem 24-3A (Part Level Submission) 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 EB 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 590 Option OptionB $169,000 $291,000 $70,400 $82,500 $31,000 $25,400 Initial cost Annual cash inflows Annual cash outflows Cost to rebuild (end of year 4) Salvage value Estimated useful life $48,600 $0$7,200 years years her
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