Answer:
The da Vinci Surgical Equipment
1. 1. The annual rate of interest being charged to the hospital for this da Vinci surgical equipment is computed as 18.055%.
The computed total interest that the hospital will pay over the 36 months' period = $574,715.60.
2. This rate of interest is too high. The hospital could borrow the sum of $1,900,000 from other sources without paying as high an interest rate. Therefore, it is not a good deal for the lessee hospital.
3. The hospital should care if the lease were either an operating or capital lease. An operating lease means that the hospital can only use the equipment for a determined number of years, which is usually less than the useful life of the equipment. But if it were a capital lease, the hospital is sure that the equipment becomes its own property.
Explanation:
a) Data and Calculations:
Cost of equipment = $1,900,000
Monthly lease payment = $68,742.10
Lease period = 36 months
Using an online financial calculator:
Interest Rate = 18.055%
Total of 36 Monthly Payments = $2,474,715.60
Total Interest Paid = $574,715.60
