Reference no: EM133058273
Question - A hospital is trying to determine the payback period for a piece of X-Ray equipment it is purchasing. The assumptions are:
-Purchase price of equipment = $350,000.
-Useful life of the equipment = 10 years.
-Revenue the machine will generate per year = $10,000.
-Direct operating costs associated with earning revenue = $75,000
-Depreciation expense per year = $15,000.
- Given the following assumptions, compute the Unadjusted Rate of Return using BOTH the original investment amount and the average investment amount.
-Average Annual Net Income is $ 400,000
-Original Investment Amount is $ 1,200,000
-Unrecovered Asset Cost at the end Of the useful life = $ 200,000