A county medical agency is considering two mutually exclusive options for treatment of a chronic illness in a population ot elderly patients. For cach option the agency has initial outlays (for equipment and initial training) and annual expenses. Patient benefits are measured in terms of quality of life, and patient costs are measured in terms of lost income due to treatment. Estimates have been made of the dollar value of both. Each option has a lifetime of 5 years, after which new options will be considered based on the technology available then. MARR is 5%. A B Investment (t = O) $120,000 $165,000 55,000 200,000 18,000 Annual expense 35.000 Annual patient benefits Annual patient costs 175,000 12,000 What is the incremental BC when the two are compared? Select the answer closest to this value.

A county medical agency is considering two mutually exclusive options for treatment of a chronic illness in a population ot elderly patients. For cach option the agency has initial outlays (for equipment and initial training) and annual expenses. Patient benefits are measured in terms of quality of life, and patient costs are measured in terms of lost income due to treatment. Estimates have been made of the dollar value of both. Each option has a lifetime of 5 years, after which new options will be considered based on the technology available then. MARR is 5%. A B Investment (t = O) $120,000 $165,000 55,000 200,000 18,000 Annual expense 35.000 Annual patient benefits Annual patient costs 175,000 12,000 What is the incremental BC when the two are compared? Select the answer closest to this value.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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