Question
The CEO of the hospital has been talking about the need to move toward electronic medical records. Given the operating losses of 2018 and 2019,
The CEO of the hospital has been talking about the need to move toward electronic medical records. Given the operating losses of 2018 and 2019, he is pushing to invest in new technologies to improve efficiency and reduce medical errors. Two vendors have visited to present their medical records systems. The table below presents the expected cash flow for each of the two options. Form a financial standpoint, which option is better? Support your answer with appropriate calculations and your analysis of cash of projected cash flows as described in the table.
Option 1 Year 3 Year 4 Year 5 Purchase Year 1 Year 2 $(475,000) $ (10,000) $ (10,300) 47,500 49,400 75,000. 86,250 $(475,000) $ 112,500 $ 125,350 $ (10,609) 51,376 99,188 $ 139,955 $ (10,927) 53,431 114,066 $ 156,570 $ (11,255) 55,568 131,175 $ 175,488 Purchase price Maintenance Cost Personnel Saving Savings due to reduced error Total Option 2 Purchase price Maintenance Cost Personnel Saving Savings due to reduced error Total $(700,000) $ (5,000) $ (5,150) 24,500 25,480 140,000 161,000 $(700,000) $ 159,500 $181,330 $ (5,305) 26,499 185,150 $ 206,344 $ (5,464) $ (5,628) 27,559 28,662 212,923244,861 $235,018 | $267,895Step by Step Solution
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