Company XYZ is considering the purchase of a $500,000 MRI machine this year (Year 0).Having the machine
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Company XYZ is considering the purchase of a $500,000 MRI machine this year (Year 0). Having the machine will generate additional net income per year as follows... Year 1 = $75,000, Year 2 = $95,000, Year 3 = $100,000, Year 4 = $150,000, and Year 5 = $175,000. XYZ could earn 4% if instead the upfront costs were invested as part of its portfolio.
1) What is the NPV of the purchase? Should the purchase be made?
2) What is the IRR of the purchase?
Related Book For
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso
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