Would the hospital want to purchase the new machine

Assignment Help Cost Accounting
Reference no: EM132722315

Tampa Hospital has been considering the purchase of a new x-ray machine. The existing machine is operable for five more years and will have a zero disposal price. The new machine will cost $580,000. The new machine will reduce the average amount of time required to take the x-rays and will allow an additional amount of business to be done at the hospital. The investment is expected to net $60,000 in additional cash inflows during the year of acquisition (year 1) and $230,000 each additional year of use (years 2, 3, 4, and 5). The new machine has a five-year life, and zero disposal value. These cash flows will generally occur throughout the year and are recognized at the end of each year. Income taxes are not considered in this problem. The working capital investment will not be recovered at the end of the asset's life.

Problem 1: What is the NET present value of the investment, assuming the required rate of return is 12%?

Problem 2: Would the hospital want to purchase the new machine?

A. $(97,340); no
B. $51,430 no
C. $ 97,340; yes
D. $166,830; yes

Reference no: EM132722315

Questions Cloud

Identify the arbitrage opportunity : Identify the arbitrage opportunity open to a trader and provide the exact details of generating the quantity.
Compute the risk neutral probability of an up jump : Explain each step of the process. Also compute the risk neutral probability of an up jump.
What is the budgeted cash payment for purchases of primer : A 2019 cash budget is being prepared for the purchase of Primer, What is the 2019 budgeted cash payment for purchases of Primer?
Find out the project npv : The cost of capital (WACC) is 10% what is the project's NPV?
Would the hospital want to purchase the new machine : Tampa Hospital has been considering the purchase of a new x-ray machine. What is NET present value of investment, assuming the required rate of return is 12%?
What is federal agency bonds : What is federal agency bonds? Their characteristics?
Explain purchase price of the? property : What was the purchase price of the? property? How much is the cost of? financing?
Explain two operational steps company : Suppose you work for Citibank in Thailand and you are considering making a loan to a Thai company that produces auto transmissions and has the following
Prepare the appropriate general journal entries : Harrison Forklift's pension expense includes a service cost of $24 million. Prepare the appropriate general journal entries

Reviews

Write a Review

Cost Accounting Questions & Answers

  Report indicate any cause of managerial investigation

Average rate per page as a dollar and percentage and does the report indicate any cause of managerial investigation?

  Define what is the irr

What is the IRR. What is the Payback in years. What is the Profitability Index

  Solve profit for each product by using physical unit

Apportion the joint costs and calculate profit for each product by using Physical Unit, sale at split off Method and constant gross margin net realized value

  Companys statement of cash flows for the year

Construct in good form the investing activities and financing activities section of the company's statement of cash flows for the year.

  What should be dan order quantity

What should be Dan's order quantity if he wants to ensure a 99% service level? What is the quantity that Dan should order, to maximize his expected profits now?

  Activity-based costing

Activity-Based Costing

  Explain the main features of cost volume profit analysis

Explain the main features of Cost Volume Profit (CVP) analysis. Summarize the concept of cost objects and explain how cost objects are used in the overall cost management process.

  Evaluate the depreciation expense for 2014

At the starting of 2014, the CFO decided to change to straight-line depreciation method and evaluate the depreciation expense for 2014.

  What is store no 16 reported loss

What is store no. 16s reported loss for the period just ended and should the store be closed? Why?

  What is the probability the acc will have a team

What is the probability the ACC will have a team in the championship game and what is the probability that the championship game will not have a team from one of these two conferences

  What is the breakeven point in sales units

What is the breakeven point in sales units and sales dollars and how many units must Write Company sell to earn a profit of $240,000 per year?

  Prepare balance sheet for canberra limited

Prepare an Income Statement and balance sheet for Canberra Limited for the year ending 31st December 2012 - Prepare closing Entries

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd