The HogwartsHospital has an old MRI machine and an outdated computer system,and they are...The...

50.1K

Verified Solution

Question

Accounting

The HogwartsHospital has an old MRI machine and an outdated computer system,and they are considering purchasing their options:
Information to help in theirdecision is as follows:
MRI machine:
cost: $875,000
Number of MRI's performed each year 8200
expected labor savings due to more efficientmachine: $40 per patient
life of new machine: 5 years
Computer system
cost: $600,000
expected cost savings per year with newsystem: $110,000
life of computer system 6 years
Hogwart's cost of borrowing (cost of capital)8%
REQUIRED:
A) WHAT IS THE PAYBACK FOR THIS NEW MRIMACHINE?
B) WHAT IS THE NET PRESENT VALUE OF THIS NEW MRIMACHINE?
C) FROM A PURELY FINANCIAL PERSPECTIVE SHOULDHOGWARTS CONSIDER ACQUIRING THE NEW MRI MACHINE?
D) WHAT OTHER CONSIDERATIONS SHOULD HOGWARTS LOOKAT IN DECIDING WHETHER OR NOT TO ACQUIRE THE MRI MACHINE.
D) WHAT IS THE PAYBACK FOR THE COMPUTERSYSTEM?
E) WHAT IS THE NET PRESENT VALUE OF THE COMPUTERSYSTEM
F) FROM A PURELY FINANCIAL PERSPECTIVE, SHOULDHOGWARTS' CONSIDER ACQUIRING THE NEW COMPUTER SYSTEM?
G) HOGWARTS ONLY HAS THE RESOURCES TO ACQUIRE ATMOST 1 OF THESE ITEMS; WHICH (IF ANY ) DO YOU RECOMMEND?
JUSTIFY YOUR ANSWER IN A MEMO TO THE DR. GANDOFF,CEO OF HOGWARTS

Answer & Explanation Solved by verified expert

4.3 Ratings (868 Votes)

A WHAT IS THE PAYBACK FOR THIS NEW MRI MACHINE Cost of the MRI Annual savings 875000 8200 40 875000 328000 267 Years B WHAT IS THE NET PRESENT VALUE OF THIS NEW MRI MACHINE NPV Present value of savings Investment 328000 PVIFA 8 5 Years 875000 43460889 C FROM A PURELY See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingThe HogwartsHospital has an old MRI machine and an outdated computer system,and they are...The HogwartsHospital has an old MRI machine and an outdated computer system,and they are considering purchasing their options:Information to help in theirdecision is as follows:MRI machine:cost:$875,000Number of MRI's performed each year8200expected labor savings due to more efficientmachine: $40 per patientlife of new machine:5 yearsComputer systemcost:$600,000expected cost savings per year with newsystem:$110,000life of computer system6 yearsHogwart's cost of borrowing (cost of capital)8%REQUIRED:A) WHAT IS THE PAYBACK FOR THIS NEW MRIMACHINE?B) WHAT IS THE NET PRESENT VALUE OF THIS NEW MRIMACHINE?C) FROM A PURELY FINANCIAL PERSPECTIVE SHOULDHOGWARTS CONSIDER ACQUIRING THE NEW MRI MACHINE?D) WHAT OTHER CONSIDERATIONS SHOULD HOGWARTS LOOKAT IN DECIDING WHETHER OR NOT TO ACQUIRE THE MRI MACHINE.D) WHAT IS THE PAYBACK FOR THE COMPUTERSYSTEM?E) WHAT IS THE NET PRESENT VALUE OF THE COMPUTERSYSTEMF) FROM A PURELY FINANCIAL PERSPECTIVE, SHOULDHOGWARTS' CONSIDER ACQUIRING THE NEW COMPUTER SYSTEM?G) HOGWARTS ONLY HAS THE RESOURCES TO ACQUIRE ATMOST 1 OF THESE ITEMS; WHICH (IF ANY ) DO YOU RECOMMEND?JUSTIFY YOUR ANSWER IN A MEMO TO THE DR. GANDOFF,CEO OF HOGWARTS

The HogwartsHospital has an old MRI machine and an outdated computer system,and they are considering purchasing their options:
Information to help in theirdecision is as follows:
		MRI machine:
	cost:	$875,000
	Number of MRI's performed each year			8200
	expected labor savings due to more efficientmachine: $40 per patient
	life of new machine:		5 years

		Computer system
	cost:	$600,000
	expected cost savings per year with newsystem:				$110,000
	life of computer system			6 years



	Hogwart's cost of borrowing (cost of capital)8%

	REQUIRED:
	A) WHAT IS THE PAYBACK FOR THIS NEW MRIMACHINE?
	B) WHAT IS THE NET PRESENT VALUE OF THIS NEW MRIMACHINE?
	C) FROM A PURELY FINANCIAL PERSPECTIVE SHOULDHOGWARTS CONSIDER ACQUIRING THE NEW MRI MACHINE?
	D) WHAT OTHER CONSIDERATIONS SHOULD HOGWARTS LOOKAT IN DECIDING WHETHER OR NOT TO ACQUIRE THE MRI MACHINE.
	D) WHAT IS THE PAYBACK FOR THE COMPUTERSYSTEM?
	E) WHAT IS THE NET PRESENT VALUE OF THE COMPUTERSYSTEM
	F) FROM A PURELY FINANCIAL PERSPECTIVE, SHOULDHOGWARTS' CONSIDER ACQUIRING THE NEW COMPUTER SYSTEM?
	G) HOGWARTS ONLY HAS THE RESOURCES TO ACQUIRE ATMOST 1 OF THESE ITEMS; WHICH (IF ANY ) DO YOU RECOMMEND?
	JUSTIFY YOUR ANSWER IN A MEMO TO THE DR. GANDOFF,CEO OF HOGWARTS