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Year MRI Equipment Biopsy Equipment 1 $200,000 $50,000 2 3 100,000 150,000 50,000 100,000 4 100,000 200,000 5 50,000 237,500

Year MRI Equipment Biopsy Equipment 1 $200,000 $50,000 2 3 100,000 150,000 50,000 100,000 4 100,000 200,000 5 50,000 237,500

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A clinic is considering the possibility of two new purchases: new MRI equipment and new biopsy equipment. Each project requires an investment of $425,000. The expected life for each is five years with no expected salvage value. The net cash inflows associated with the two independent projects are as follows: 

1. Compute the payback period for each project. 

2. Compute the accounting rate of return for each project. 

Year MRI Equipment Biopsy Equipment 1 $200,000 $50,000 2 3 100,000 150,000 50,000 100,000 4 100,000 200,000 5 50,000 237,500
Transcribed Image Text:Year MRI Equipment Biopsy Equipment 1 $200,000 $50,000 2 3 100,000 150,000 50,000 100,000 4 100,000 200,000 5 50,000 237,500
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