CMU Clinic is considering new lab equipment. The equipment will allow CMU to do in-house...
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CMU Clinic is considering new lab equipment. The equipment will allow CMU to do in-house several test that are currently contracted out. This will result in annual savings of $45,000. The equipment will cost $200,000 and require $16,000 annually to maintain. The economic life of the equipment is 8 years and it can be depreciated over its economic life using the straight-line method. The equipment will have no salvage value at the end of 8 years. CMU's investments are currently earnings 12%. Should CMU purchase the equipment? At a minimum, calculate the ARR, NPV, and IRR to assist you in your decision. What other information would be helpful in making your decision.
CMU Clinic is considering new lab equipment. The equipment will allow CMU to do in-house several test that are currently contracted out. This will result in annual savings of $45,000. The equipment will cost $200,000 and require $16,000 annually to maintain. The economic life of the equipment is 8 years and it can be depreciated over its economic life using the straight-line method. The equipment will have no salvage value at the end of 8 years. CMU's investments are currently earnings 12%. Should CMU purchase the equipment? At a minimum, calculate the ARR, NPV, and IRR to assist you in your decision. What other information would be helpful in making your decision.
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