Examlex
Diemia Hospital has been considering the purchase of a new x-ray machine. The existing machine is operable for five more years and will have a zero disposal price. If the machine is disposed now, it may be sold for $120,000. The new machine will cost $650,000 and an additional cash investment in working capital of $105,000 will be required. The new machine will reduce the average amount of time required to take the x-rays and will allow an additional amount of business to be done at the hospital. The investment is expected to net $130,000 in additional cash inflows during the year of acquisition and $110,000 each additional year of use. The new machine has a five-year life, and zero disposal value. These cash flows will generally occur throughout the year and are recognized at the end of each year. Income taxes are not considered in this problem. The working capital investment will not be recovered at the end of the asset's life.
What is the net present value of the investment, assuming the required rate of return is 16%? Would the hospital want to purchase the new machine?
Bailee
A person or entity who is given temporary possession but not ownership of a property or goods for a specific purpose.
Bailed Property
Property that is in the custody of one party but belongs to another, under an agreement for its return or safeguarding.
Public Policy
The principles, often unwritten, on which social laws are based, guiding the governing bodies in their management and administration of the nation.
Bailee
An individual or entity given temporary custody of someone else's property under a bailment agreement.
Q9: Which option should Patrick choose to maximize
Q22: What is the gross margin for 2018?<br><img
Q41: Just-in-time systems are similar to materials requirement
Q63: Average number of repeat visits in a
Q71: The proponents of using net book value
Q86: What targets should companies use,and when should
Q95: Manufacturing overhead costs in an automobile manufacturing
Q137: Diemia Hospital has been considering the purchase
Q146: Rework labor time is considered an overhead
Q201: The determination of a cost as either