Wesley Health Systems is in need of a new magnetic resonance imaging (MRI) machine. Given the financial challenges facing health organizations, the financial leaders at Wesley must determine the best option for securing the equipment. As the senior cost analyst for the organization, you are charged with the responsibility of determining the most appropriate use of financial resources and making recommendations, and this often involves the acquisition of capital equipment. You are asked to evaluate the options of lease and purchase and to recommend a course of action. The purchase price of the MRI is $1,300,000 at 10% (PV), with straight line depreciation over 5 years. At the end of its useful life, the trade-in value will be equal to $130,000. There is also a $12,000 annual maintenance expense. The leasing cost for the equipment is $26,000 monthly. The leasing period equals 60 months and includes all costs associated with maintenance.

You will formulate a well-justified recommendation based on both financial calculations and strategic considerations specific to the health organization's context.

Answer rating: 100% (QA)

Analysis of Purchase vs Lease for MRI Machine at Wesley Health Systems Financial Calculations Purchase Option Purchase Price 1300000 Depreciation stra... View the full answer