Calculate the EAW of purchasing the equipment

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Reference no: EM132637067

A profitable hospital is considering buying some medical equipment. The following data has been collected.

Initial Cost $100,000

Operating Costs/year 50,000

Annual revenue (income from using) 100,000

Major overhaul at end of year 5 = 40,000

Salvage value 10,000

Useful life 10 years

Problem 1: Using an interest rate of 15%, calculate the EAW of purchasing the equipment. (Determine the contribution of each component of the cash flow to the EAW, then add together.)

Reference no: EM132637067

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