Overview
Most business are forced to evaluate opportunities for capital investments to allocate scarce funds. While there are many ways to evaluate the wisdom of a capital investment, one such way is to do so from a cost accounting perspective. In this assignment you play the role of cost accountant evaluating a planned investment.
Scenario
Healthcare America is weighing the purchase of a new $3M MRI facility to serve its expanding presence in the area of orthopedic medicine. The expectation is that the machine will be nearly fully utilized in next five years. The government recently exempted taxes on profits from new investments to encourage capital investments. The equipment is expected to have 10 years of useful life with no salvage value. The company employs straight-line depreciation. Net cash inflows of $800,000 are expected each year for five years. The company uses a rate of 9% in evaluating its capital investment projects.
Instructions
Create a professional PowerPoint presentation (with detailed speaker’s notes) that fully supports your recommendation of whether or not this capital expenditure is justified from a cost accounting perspective.
Include the following in the presentation:
Explain your overall approach to evaluating the capital purchase.What criteria are most important?What questions do you need answered?
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Formatting
Title Page
Citation
Outline
