Requested bids for new magnetic resonance imaging

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Reference no: EM132040456

You recently requested bids for a new MRI (magnetic resonance imaging) machine in for your radiology department. As a result, two vendors have submitted quotes based off the specs in your proposal. You anticipate the service life of this machine to be 10 years and that it should generate $600,000 per year at 50% capacity. To remove any potential for bias, your compliance department has provided the bids to you (below) and removed the name of each company.

Bid: Company A

Supply and install a 3T (3 Tesla) MRI scanner. Once bid is accepted, work will be completed in 90 days. Each day after 90 days incurs a $5,000 (a day) penalty. Warranty is for 2 years. Software upgrades for 1 year.

Total cost: $3,650,000

Additional warranty: $150,000 (per year to year 5)

Software upgrades: $50,000 (per year up to year 5)

Bid: Company B

Supply and install a 3T (3 Tesla) MRI scanner. Once bid is accepted, work will be completed in 90 days. Each day after 90 days incurs a $5,000 (a day) penalty. Warranty is for 4 years. Software upgrades for 5 years.

Total cost: $4,400,000

Additional warranty: $75,000 (per year to year 10)

Software upgrades: $25,000 (per year up to year 10)

How would you calculate the ROI for each company? Is company B the better option?

Reference no: EM132040456

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