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
Related questions
Question
#5

Transcribed Image Text:The General Hospital is evaluating new office equipment offered by four companies. The useful life of the equipment is 4
years.
First cost
Maintenance and
operating cost (annual)
Annual benefit
Salvage value
Select one:
O 30%
O 25%
O 35%
Company A
$15,000
1,600
The internal rate of return for Company A is close to
O 20%
8,000
3,000
Company B
$18,000
1,100
9,000
3,500
Company C
$25,000
400
13,000
6,000
Company D
$20,000
900
11,000
4,500
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