Share
Explore BrainMass

Prob. 11-B2 Oncology department NPV

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

Attachments

Solution Summary

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

$2.19