Valley Hospital Is Considering the Purchase of New Medical Equipment

question 42

Multiple Choice

Valley Hospital is considering the purchase of new medical equipment for $25,000. The old equipment has zero salvage value. The costs associated with operating the equipment are: $\begin{array}{lrr} & \underline{\text { Old Equipment}}& \underline{\text { New Equipment}}\\& \$ 9,000 & \$ 4,500 \\\text { Mabour } & 2,000 & 1,200 \\\text { Miscellaneous } & 1,500 & 1,300 \\\text { Amortization } & 8,000 & 4,750\end{array}$
If the new machine is purchased and ignoring income taxes, the payback period is:

• A) 3.57 years
• B) 2.13 years
• C) 2.86 years
• D) 4.55 years

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Definitions:

Histogram

A graphical representation of the distribution of numerical data, typically shown as bars indicating the frequency of data points within specified intervals.

Frequency

The number of times an event or occurrence takes place within a specified period or dataset.

Symmetric

Refers to a situation where a distribution or pattern shows equality or uniformity across a central point or axis.

Histogram

A graphical representation of the distribution of numerical data, where the data are binned into ranges and each bin is represented by a bar with its height proportional to the frequency of data points in the bin.