Question 2 (6 marks) The Dandenong Hospital is considering purchasing two independent pieces of medical equipment having the following cash flow streams: Year Machine A Machine B 0 -$50,000 -$40,000 1 +20,000 +20,000 2 +20,000 +10,000 3 +10,000 +5,000 4 +5,000 +40,000 5 +5,000 +40,000 The Hospital uses a combination of the net present value approach and the payback approach to evaluate its equipment purchases. It requires that all equipment have a positive net present value when cash flows are discounted at 10 percent and that they have a payback period no longer than 3 years. Which machine or machines should the Hospital buy? Why?
© 2015 MSA Homework Help All Rights Reserved
Disclaimer: MSA Homework Help provides reference papers to the student and we strongly recommend you not to submit the papers as it is. Please use our solutions as model answer to improve your skills.