Brighter Smile Dental is about to invest in the latest ultrasound diagnostic equipment. The Chief Medical Officer estimates that it will generate uniform revenues of $400,000 for each of the next ten years. What is the net present value of this stream of earnings, at an interest rate of 4 percent? What is the net present value if the machine lasts only seven years and not ten years? If the equipment cost $2.5 million, should the facility purchase it?

Question

Quizplus · Accepted Answer

The Answer of Brighter Smile Dental is about to invest in the latest ultrasound diagnostic equipment. The Chief Medical Officer estimates that it will generate uniform revenues of $400,000 for each of the next ten years. What is the net present value of this stream of earnings, at an interest rate of 4 percent? What is the net present value if the machine lasts only seven years and not ten years? If the equipment cost $2.5 million, should the facility purchase it?

Brighter Smile Dental Is About to Invest in the Latest