ACCT 386 - Week 7 - Homework - Question 8

ACCT 386 - Week 7 - Homework - Question 8
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ACCT 386 - Week 7 - Homework - Question 8

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Question 8

Dr. Heidi Black is the managing partner of the Crestwood Dental Clinic. Dr. Black is trying to determine whether or not the clinic should move patient files and other items out of a spare room in the clinic and use the room for dental work. She has determined that it would require an investment of $121,500 for equipment and related costs of getting the room ready for use. Based on receipts being generated from other rooms in the clinic, Dr. Black estimates that the new room would generate a net cash inflow of $18,000 per year. The equipment purchased for the room would have a thirteen-year estimated useful life. (Ignore income taxes.)

 Click here to view Exhibit 13B-2, to determine the appropriate discount factor using tables