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Question 2 (a) Mount Hill Hospital is considering buying one of the advanced CT scan systems given in Table Q2(a). Assume that the MARR is
Question 2 (a) Mount Hill Hospital is considering buying one of the advanced CT scan systems given in Table Q2(a). Assume that the MARR is 10% to answer the following questions. Brand Initial Cost $ million Uniform Annual Benefit $ million Salvage value at End-of-useful life $ million Useful life in years Table Q2(a) System P 200 95 50 Systems 700 120 150 6 12 (1) Present the cashflow table for System P, System S and System (S-P). (3 marks) Analyze the choice of the CT scan systems using incremental analysis. Use i = 1% as the starting reference value for your calculation. (8 marks) (iii) Calculate the IRR. (Hint: Interpolation may be required.) (2 marks) (iv) Recommend the choice of CT scan system and justify your recommendation. (2 marks) Question 2 (a) Mount Hill Hospital is considering buying one of the advanced CT scan systems given in Table Q2(a). Assume that the MARR is 10% to answer the following questions. Brand Initial Cost $ million Uniform Annual Benefit $ million Salvage value at End-of-useful life $ million Useful life in years Table Q2(a) System P 200 95 50 Systems 700 120 150 6 12 (1) Present the cashflow table for System P, System S and System (S-P). (3 marks) Analyze the choice of the CT scan systems using incremental analysis. Use i = 1% as the starting reference value for your calculation. (8 marks) (iii) Calculate the IRR. (Hint: Interpolation may be required.) (2 marks) (iv) Recommend the choice of CT scan system and justify your recommendation. (2 marks)
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