Access Millions of academic & study documents

Capital Investment Decision

Content type
User Generated
Subject
Business
Type
Homework
Showing Page:
1/3
Investment Decisions
Internal Rate of Return
Name
Institution Affiliation

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/3
Investment Decisions
Analysis of Internal Rate of Return
The internal rate of return is the discount rate when the computed net present value of the
cash flow is equal to zero. It is calculated by changing the rate of discount until the net present
value is equal to zero. The doctor will take the highest rate of return (Belloc, Hilaire, 1923) with
the assumption that the net present value is zero. This type of the investment method requires
that the doctor should observe the outcome of the internal rate of return. Investment decision is
best made when the internal rate of return (Roach, Geoffrey T., 2000 ) is greater than the given
opportunity cost of the initial capital at final stage of analyzing the project is to undertake the
project.
Factors to consider when making a decision before buying an imaging machine
1. Availability of funds: it is very important to check that the purchase of such a
costly equipment will not surpass the budgetary allocations or the financial
capacity of the new hospital.
2. Presence of technical support team: more importantly, how experienced the
ethical support team is.
3. The level of expertise and specialization of the doctors: if the available doctors do
not have experience with the imaging machine, the hospital might incur another
cost of educating the doctors, or hiring more qualified ones.
4. Availability of the spare parts and other accompanying usable in the local market
to minimize the operation cost.
Review of the Payback Investment Method

Sign up to view the full document!

lock_open Sign Up
Showing Page:
3/3

Sign up to view the full document!

lock_open Sign Up
Unformatted Attachment Preview
Investment Decisions Internal Rate of Return Name Institution Affiliation Investment Decisions Analysis of Internal Rate of Return The internal rate of return is the discount rate when the computed net present value of the cash flow is equal to zero. It is calculated by changing the rate of discount until the net present value is equal to zero. The doctor will take the highest rate of return (Belloc, Hilaire, 1923) with the assumption that the net present value is zero. This type of the investment method requires that the doctor should observe the outcome of the internal rate of return. Investment decision is best made when the internal rate of return (Roach, Geoffrey T., 2000 ) is greater than the given opportunity cost of the initial capital at final stage of analyzing the project is to undertake the project. Factors to consider when making a decision before buying an imaging machi ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.
Studypool
4.7
Indeed
4.5
Sitejabber
4.4

Similar Documents