Question: The Bobcat Clinic is evaluating two different linen clearning vendors. One is more labor intensive. The other requires up front capital expenditure of technology and

The Bobcat Clinic is evaluating two different linen clearning vendors. One is more labor intensive. The other requires up front capital expenditure of technology and then will require lower labor expense over time. There are no incremental revenues attached to the projects, so the decision will be made on the basis of the present value of costs. Bobcat's corporate cost of capital is 10 percent. Here are the net cash flow estimates in thousands of dollars: Year System X (Labor) System Y (Equipment) 0 -$750 -$1,400 1 -$750 -$500 2 -$750 -$500 3 -$750 -$500 4 -$750 -$500 5 -$750 -$500

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