A small community hospital is considering the purchase of a new ultrasound machine, which costs $120,000 and is expected to generate $30,000 in annual net cash inflows. Using the payback period method, determine if this investment meets the hospital management's requirement of a maximum 4-year payback period for approving new projects. Discuss briefly how the payback period calculation will influence the hospital's decision to invest in the ultrasound machine, considering the hospital's financial goals and the necessity to improve patient care services within the payback time frame

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To determine if the investment in the ultrasound machine meets the hospital managements requirement of a maximum 4year payback period we need to calcu... View the full answer