Question
You are the new Finance Director of a private hospital and one of the first tasks entrusted to you is to determine if the purchase
You are the new Finance Director of a private hospital and one of the first tasks entrusted to you is to determine if the purchase of a new ultrasound machine would be a wise investment. The new equipment is estimated to cost $10 million and the projected net cash flows for the next eight (8) years is $1.6 million per year. It must be noted that the expected useful life of these ultrasound machines is generally five (5) years. Current investment rates are at 7% and this would be used as the discount rate for the assessment.
Present the results of the NPV calculation and recommend if the purchase of the new equipment is viable.
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