Santa cruz community hospital is considering investing, Ask an Expert

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Santa Cruz community hospital is considering investing $90,000 in new laundry equipment to replace its present equipment, which is completely depreciated and outmoded. An alternative to this investment is a long term contract with a local firm to perform the hospital’s laundry service. It is expected that the hospital would save $20,000 per year in the depreciable life of the projected equipment are 6 years. Salvage value of the present equipment is expected to be zero. Assuming that Santa Cruz Community Hospital can borrow or invest money at 8%, calculate the payback, the NPV, and profitability index. Ignore any reimbursement effects.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91602606

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