Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Scotia Family Health Team is investigating purchasing an ultrasound machine for use in its patient clinic. The machine would cost $87,700, including invoice cost, freight,

Scotia Family Health Team is investigating purchasing an ultrasound machine for use in its patient clinic. The machine would cost $87,700, including invoice cost, freight, and the training of employees to operate it. Scotia has estimated that the new machine would increase the companys cash flows, net of expenses, by $15,000 per year. The machine would have a fifteen-year useful life with no expected salvage value. (Ignore income taxes.)

(Hint: Use Microsoft Excel to calculate the discount factor(s).)
Required:
1.

Compute the machines IRR. (Do not round intermediate calculations and round your final answer to nearest whole number.)

2.

Compute the machines net present value. Use a discount rate of 15%. (Do not round intermediate calculations and round your final answer to the nearest dollar amount.)

3.

Suppose that the new machine would increase the companys annual cash flows, net of expenses, by only $12,800 per year. Under these conditions, compute the internal rate of return. (Do not round intermediate calculations and round your final answer to nearest whole number.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fraud Smart

Authors: K. H. Spencer Pickett

1st Edition

0470682582, 978-0470682586

More Books

Students also viewed these Accounting questions