Total Anticipated
Current Request Project Cost
Purchase of Informational Health Information software $30,000.00 $30,000.00
10 New computers $8,000.00 $8,000.00
Maintenance cost $4,000.00 $4,000.00
Total: $42,000.00 $42,000.00
Project Financing
The initial investment cost is $42,000.00 for the purchase of new equipment. Savings in operating costs are estimated to be $9,000.00 per year for the entire 10-year life of the project. The discount rate is assumed to be 8%. The computer has an estimated 7-year life with an estimated $8,000.00 salvage value. Annual maintenance cost of $2500.00. The investment’s profitability index with the discount rate of 8%. The asset can be financed with a 3-year annual $15,000.00 lease payment or can be purchased outright for $38,000.00. Assume that costs are reimbursed 30%. Further assume is a tax-paying entity with a marginal tax rate of 40%.
Maintenance and Operations
It is anticipated that maintenance and operational cost for the Informational technology equipment’s will be $2,500.00.

Section II: Establishing Acceptability
Complete and discuss the results of the acceptability of the item for key stakeholders.

Respond based on research to the purchase and use of the items at other organizations.

Determine organizational risk and compliance issues related to the purchase and use of the capital item.

Recommend risk avoidance strategies.

Explain management roles and risks in accordance to compliance.

Section III: Economic Feasibility
Create a budget that demonstrates the effect of the capital purchase on the service line, including the productivity of the service line.

Complete a financial analysis of the capital expenditure. Provide responses in a Microsoft® Excel® spreadsheet.

Create a pro forma summary sheet showing the net revenue and +cost impact of purchasing this item.

Section IV: Final Project Summary

Write a 1,200-word executive summary for the justification and include it at the beginning of the paper. Attach the financial statement.

Format your complete paper as you would if you were presenting your proposal to a health care organization, by combining all sections of the assignment into a single presentation justifying the expenditure you recommended as part 1 in WK 4.

Optional Information:
Level/Year: Graduate
Subject: Financial Management