The General Hospital is evaluating new office equipment offered by three compani

Question

The General Hospital is evaluating new office equipment offered by three companies. The interest rate is 8%. Company A Company B Company C Cost $500 $600 $700 Annual benefit 130 115 100 End of useful life salvage value 0 250 180 Useful life (yrs) 5 5 10 6-2: Use an annual cash flow analysis to determine the company from which you should purchase the equipment. ? Company A ? Company B ? Company C ? do nothing 6-3: Determine the incremental rate of return between Company B and Company C. ? 7.5% ? 8.5% ? 9.5% ? 10.5%

Explanation / Answer

8.5%

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