Reduction in the price of the equipment

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Reference no: EM131050398

XYZ Hospital has two options in how to purchase some EDP equipment with a list price of $5m. Option one is a 15% reduction in the price of the equipment but the hospital has to pay the full amount at the time of purchase. Option two is to pay for the equipment in four easy payments of $1.25m over four years. Which option should the hospital choose if it's opportunity cost of capital is 7.5%? What if the opportunity cost of capital is 4.5%?

Reference no: EM131050398

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Reduction in the price of the equipment : XYZ Hospital has two options in how to purchase some EDP equipment with a list price of $5m. Option one is a 15% reduction in the price of the equipment but the hospital has to pay the full amount at the time of purchase. What if the opportunity cost..

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