Question: Santa Cruz Community Hospital is considering investing $90,000 in new laundry equipment to replace its present equipment, which is completely depreciated and outmoded.An alternative to this investment is a long-term contract with a local firm to perform ~hehospital's laundry service. It is expected that the hospital would save $20,000 per year in operating costs if the laundry service was performed internally. 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 Santa Cruz Community Hospital can borrow or invest money at 8%, calculate the payback, the NPV, and the profitability index. Ignore any reimbursement effects.