Reference no: EM132507025
*This question is from a class about financial management in Healthcare Organizations. It would not let me put public health as the subject*
Metropolis Health System has to do something about their ambulance situation. They have to (1) buy a new ambulance, (2) lease a new one, or (3) renovate an existing ambulance that MHS already owns. Rob Lackey, the Assistant Controller, has been asked to gather pertinent information in order to make a decision. So far Rob has found these facts:
-It will cost at least $250,000 to purchase a new ambulance, although the cost varies widely depending upon the quantity and sophistication of the emergency equipment contained on the vehicle.
-In order to renovate the existing vehicle, it will cost at least $100,000 to purchase and install a new "box" (in other words, a new emergency-equipped body is installed on the existing chassis.) Rob has found this existing ambulance has an odometer reading of 80,000 miles. The vehicle will also need a new fuel pump and new tires, but he believes these items would be recorded as repair and maintenance operating expenses and thus would not be included in his calculations.
-Lease terms for ambulances also vary widely, but so far Rob believes a cost of $60,000 per year is a ballpark figure.
Required
How much more information should Rob have before he begins to make any calculations? Make a list. Which alternative do you believe would be the best? Give your reasons.