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    Prob. 11-B2 Oncology department NPV

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    NPV for investment decisions

    The head of the Oncology department of FH Research Center is considering the purchase of some new equipment. The cost is $420,000, the economic life is 5 years, and there is no terminal disposal value. Annual cash inflows from operations would increase by $140,000 and the required rate of return is 14%. There are no taxes.

    1. Compute the NPV
    2. Should the research center acquire the equipment? Explain

    Prob. 11-B2
     
    The head of the Oncology department of FH Research Center is considering the purchase of some new equipment. The cost is $420,000, the economic life is 5 years, and there is no terminal disposal value. Annual cash inflows from operations would increase by $140,000 and the required rate of return is 14%. There are no taxes.
     
    Compute the NPV
    Should the research center acquire the equipment? Explain

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    https://brainmass.com/business/capital-budgeting/prob-11-b2-oncology-department-npv-474699

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    Solution Summary

    Your tutorial is attached in Excel. I did it using the PV function, IRR function and using the charts.

    $2.19

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