Seattle Hospital, a nonprofit organization, estimates that it can save $25,000 a year in cash operating costs for the next 9 years if it buys a special-purpose eye-testing machine at a cost of $100,000.

No terminal disposal value is expected. Seattle Hospital's required rate of return is 12%. Assume all cash flows occur at year-end except for initial investment amounts. Seattle Hospital uses straight-line depreciation.

1.Calculate the following for the special-purpose eye-testing machine: a.Net present value b.Payback periodc.Internal rate of returnd.Accrual accounting rate of return based on net initial investmente.Accrual accounting rate of return based on average investment2.

What other factors should

Seattle Hospital

consider in deciding whether to purchase the special-purpose eye-testing machine?