Cash flow reporting methods

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Reference no: EM13894255

Of the 4 cash flow reporting methods provided, which method is used in the following scenario? Scenario: Assumptions • Item: The proposal is for the purchase of a new MRI machine • Cost: The machine costs $1,500,000. The cost for preparing the MRI suite is $500,000. The total cost is $2 million. • Life: 10 years • Salvage value: $100,000 • Cost of capital: Estimated at 5% • Cash flow: The MRI machine is expected to generate revenue. The increase in revenue is anticipated to be $2,500,000 over a period of 5 years. • Year 0 = ($2,000,000) • Year 1 = $500,000 • Year 2 = $500,000 • Year 3 = $500,000 • Year 4 = $500,000 • Year 5 = $500,000

Reference no: EM13894255

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