Watauga Medical Center is considering purchasing an ultrasound machine for $1,135,000 The machine has a 10 year life and an estimated salvage value of $40,000 Installation costs and freight charges will be $24,200 and $800, respectively The Center uses straight line depreciation The medical center ...

a Cost of the ultrasound machine 1135000 24200 800 1160000 Annual Cash Flow Number of proce ...

Watauga Medical Center is considering purchasing an ultrasound machine for $1,135,000. The machine has a 10-year life

Question:

Watauga Medical Center is considering purchasing an ultrasound machine for $1,135,000. The machine has a 10-year life and an estimated of $40,000. Installation costs and freight charges will be $24,200 and $800, respectively. The Center uses straight-line depreciation.
The medical center estimates that the machine will be used five times a week with the average charge to the patient for ultrasound of $850. There are $10 in medical supplies and $40 of technician costs for each procedure performed using the machine.
Instructions
(a) Compute the for the new ultrasound machine.
(b) Compute the annual rate of return for the new machine.
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...