Question
Question 3 (18 marks) Medical Experts Inc. is considering to contract an outside company to supply medical equipments for its clients. Medical Experts' managers want
Question 3 (18 marks) 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
Required Marks a) Calculate the Payback period for each of the two options.
b) Calculate the internal rate of return of the two options.
c) Calculate the Net Present Value for each of the two options at the expected rate of return is 10%.
d) Comment on which supplier you think Medical Experts Inc. should choose. 2 Total 18
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