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Siloam Hospital, a profit organization, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys
Siloam Hospital, a profit organization, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye-testing machine at a cost of $110,000. No terminal disposal value is expected. Siloam Hospitals required rate of return is 14%. Assume all cash flows occur at year-end except for initial investment amounts. Required: Calculate the following for the special-purpose eye-testing machine: a. Net present value b. Payback period c. Internal rate of return
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