Medical Experts Inc. is considering to contract an outside company to supply medical equipments for its clients. Medical Experts' managers want to make a decision of choosing between two suppliers who will be contracted for a period of 4 years. The following are the details of the two options: Supplier Initial Investment Annual Cash Flow Period in years Supplier 1 $150,000 $50,000 4 Supplier 2 $100,000 $25,000 4 Please answer the following questions: a. What is the Payback period for each of the two options? b. What is the Net Present Value for each of the two options if the expected rate of return is 10%? c. Which supplier do you think Medical Experts Inc. should choose?
Medical Experts Inc. is considering to contract an outside company to supply medical equipments for its clients. Medical Experts' managers want to make a decision of choosing between two suppliers who will be contracted for a period of 4 years. The following are the details of the two options: Supplier Initial Investment Annual Cash Flow Period in years Supplier 1 $150,000 $50,000 4 Supplier 2 $100,000 $25,000 4 Please answer the following questions: a. What is the Payback period for each of the two options? b. What is the Net Present Value for each of the two options if the expected rate of return is 10%? c. Which supplier do you think Medical Experts Inc. should choose?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Medical Experts Inc. is considering to contract an outside company to supply medical equipments for its clients. Medical Experts' managers want to make a decision of choosing between two suppliers who will be contracted for a period of 4 years. The following are the details of the two options:
| Supplier | Initial Investment | Annual Cash Flow | Period in years |
|---|---|---|---|
| Supplier 1 | $150,000 | $50,000 | 4 |
| Supplier 2 | $100,000 | $25,000 | 4 |
Please answer the following questions:
a. What is the Payback period for each of the two options?
b. What is the
c. Which supplier do you think Medical Experts Inc. should choose?
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