The General Hospital is evaluating new office equipment offered by 2 companies. In each case the...

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Finance

The General Hospital is evaluating new office equipment offeredby 2 companies. In each case the interest rate is 15% and theuseful life of the equipment is 4 years. Use incremental analysisbenefit cost ratio pW to determine the company from which youshould purchase the equipment
Company A, Company B
First cost $ 15,000 $ 25,000
Annual M&R cost $ 1,600 $ 800
Annual benefit $ 8,000 $ 3,000
one-off cash flow $ 1,200. $ 900. (both saved in 2 years)
Salvage value. $ 3,000 $ 3,500

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The Incremental benefit cost ratio analysis is used to select the best alternative project from a set of mutually exclusive alternatives In case of The General Hospital is evaluating new office See Answer

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