The Cost To Purchase The CT Scan Is 1,300,000 At 10 PV

The Cost To Purchase The Ct Scan Is 1300000 At 10 Pv With Strai

The cost to purchase the CT scan is $1,300,000 at a 10% present value (PV) rate, with straight-line depreciation over 5 years. The trade-in value at the end of its useful life is $130,000. Annual maintenance expenses are $12,000. Alternatively, the equipment can be leased at a monthly payment of $26,000 for 60 months, which covers all maintenance costs. The provided tables include financial details such as principal payments, interest payments, total expenses, PV factors at 10%, and PV expenses for both purchase and lease options.

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The decision to acquire medical equipment such as a CT scan involves a comprehensive financial assessment considering both purchase and leasing options. This analysis focuses on evaluating the total costs over the equipment’s useful life, incorporating factors such as initial purchase price, depreciation, maintenance costs, trade-in value, leasing costs, and present value calculations at a 10% discount rate.

Purchasing a CT scan involves a substantial initial investment of $1,300,000. Applying a straight-line depreciation method over five years results in annual depreciation expenses of $260,000 ($1,300,000 divided by 5). The trade-in value at the end of five years is projected at $130,000, which mitigates the net purchase cost. Maintenance expenses are estimated at $12,000 annually, which accrues uniformly each year and should be factored into the total ownership cost.

On the other hand, leasing the equipment entails a monthly fee of $26,000 over a period of five years (60 months). The lease agreement incorporates maintenance costs, thereby eliminating additional maintenance expenses for the lessee. The total lease payments amount to $1,560,000 ($26,000 multiplied by 60 months). However, when assessing the financial viability, it is necessary to discount future lease payments to their present value using a 10% discount rate, which accounts for the time value of money. The PV factors provided in the tables facilitate this calculation, allowing for an accurate comparison with the purchase costs.

Calculating the present value of the purchase involves discounting the initial cost and the trade-in value. The PV of the initial cost ($1,300,000) with a 10% rate over five years is crucial for comparing with leasing’s PV expense. Similarly, calculating the PV of total lease payments involves using the provided PV factor at 10% for five years, thus determining the actual financial burden of leasing in today’s dollars.

When comparing purchase and lease options from a financial perspective, the key metrics to consider include total expenses, net present value, tax implications, and the strategic flexibility associated with each choice. Purchasing may offer ownership benefits, potential residual value, and depreciation advantages, whereas leasing provides cash flow flexibility, off-balance-sheet benefits, and maintenance cost savings.

Furthermore, the decision may be influenced by external factors such as interest rate fluctuations, technological obsolescence, and the hospital’s strategic plans regarding asset management. For instance, if rapid technological advancements are expected, leasing could be preferable to avoid outdated equipment. Conversely, if the hospital anticipates holding the equipment for an extended period, purchasing might be more cost-effective in the long run.

In conclusion, a comprehensive financial analysis incorporating the initial costs, ongoing expenses, trade-in value, and present value calculations is essential for making an informed decision. This analysis should also include qualitative factors such as operational flexibility, technological obsolescence risk, and strategic financial planning. Both purchase and leasing have distinct advantages and disadvantages, and the optimal choice depends on the hospital’s financial situation, operational needs, and long-term strategic goals.

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