A biomedical engineer with Johnston Implants just received estimates for replacement equipment to deliver online selected diagnostic results to doctors performing surgery who need immediate informa- tion on the patient's condition. The cost is $200,000, the annual maintenance contract costs $5000, and the useful life (technologically) is 5 years.
a. What is the alternative if this equipment is not selected? What other information is necessary to perform an economic evaluation of the two?
b. What type of cash flow series will these esti- mates form?
c. What additional information is needed to con- vert the cash flow estimates to the other type?