Question: Ci Answer the following questions using the information below: The Atheist Hospital is considering the purchase of a new x-ray machine. The existing machine is
Ci Answer the following questions using the information below: The Atheist Hospital is considering the purchase of a new x-ray machine. The existing machine is operable for five more years and will have a zero disposal price. If the machine is disposed of immediately, it can be sold for $92,000. The new machine will cost $667.000, payable immediately in fill. It is expected to reduce the amount of time to take x-rays and result in $50,000 in additional cash infows in the first year and $240,000 during each additional year of operation. The new machine has the same five-year life as the existing one, and zero disposal value. Although cash flows will generally occur throughout the year, assme in the analysis that they occur at the end of the year. The hospital is a not-for-profit organization and does not pay income taves. Questions: il, what is the net present value of the investment, assuming the required rate of return is 9%? NPV 8 2. Would the hospital want to purchase the new machine? Comment if desired
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