A Local Hospital is evaluating new lab. Equipment. The interest rate is $8\%$ and in each case the equipment$’$s useful life is $10$ years. Use the NPV analysis to select the best equipment.

Company              A                              B                                C

First Cost          $$20,000$                   $$30,000$                  $$25,000$

O&M Cost $\mathrm{ \; \; \; \; \; \; \; 2}60014001900$

Benefit$/$Yr$.5,0007,5006,500$

Salvage Val.       $6,0009,0007,500$

$($i$)$ Select the best alternative based on NPV analysis.

$($ii$)$ Do a break$-$ even study based on $“$First Cost$”$ with the next best alternative. For example, if B is the best alternative and C is the second best, then lowering the $“$First Cost$”$ of alternative C will make it more competitive. Find out at what value of the $“$First Cost$”$ C breaks even with B$.$ At break even the NPVs are equal.