This assignment has two parts:
Southeast General Hospital is considering investing $95,000 in new dietary equipment to replace its present equipment, which is completely depreciated and outdated. An alternative to this investment is a long-term contract with a local firm to perform the hospital’s dietary service. It is expected that the hospital would save $20,000 per year in operating costs if the dietary service was performed internally, versus contracting it out. Both the expected life and the depreciable life of the projected equipment are 6 years. Salvage value of the present equipment is expected to be zero. Assuming that Southeast General Hospital can borrow and invest money at 8%, calculate the payback period. Please show your work for this calculation and label it properly.
2. Identify and describe the four stages of the capital decision-making process according to your textbook.
(Your written assignment should be at least two pages in length, double spaced, 12 font with the appropriate heading, introduction, body, conclusion, and references).