Use the data presented below to determine the benefit$/$cost ratio, the net present value, and the average payback periods for the proposed equipment acquisition. Then, decide whether or not the opportunity should be pursued and explain your reason$($s$).$

A new technology is available that may improve the financial performance of your organization. The equipment costs $$38,000,000$ and can perform $290,000$ tests a year. There is high demand for this new kind of testing in your community. Installation of the equipment will cost an additional $$600,000.$ The technology will allow your organization to see an increase in volume of $125,000$ tests in the first year, climbing by $40,000$ tests each year. The price charged for each test is $$30\mathrm{.}00.$

The test is covered by insurance. Several programs pay for it at different rates. The Care$-4-$Me insurance company pays $85\%$ of the charge for half of the patient population. Commemorative Coverage Company pays $65\%$ for $25\%$ of the patients. The remaining patients are self$-$paying customers who pay face value $($$$30\mathrm{.}00)$ for the test.

In addition to increasing the number of tests that can be performed, the technology will allow for a reduction of $7$ full time staff each of whom is paid

$$68,000$ per year plus an additional $14\%$ for fringe benefits. Maintenance for the first year is included with the price of the equipment. Thereafter, the cost will be $$28,000$ per year.

Prepare a benefit$/$cost analysis for a five year period to determine if this technology is worth pursuing. Your organization uses a hurdle rate of $7\mathrm{.}7\%$ for discounting future cash flows.