Medilab Diagnostics Pvt. Ltd., a fast-growing healthcare diagnostics chain in Maharashtra, operates several diagnostic centers, offering services…

Medilab Diagnostics Pvt. Ltd., a fast-growing healthcare diagnostics chain in Maharashtra, operates several diagnostic centers, offering services such as pathology, radiology, and preventive health screenings. One of their most profitable centers in Pune recently experienced downtime due to failure of its 10-year-old ultrasound scanner. The machine has reached the end of its useful life, causing disruptions in patient appointments, especially in obstetrics and abdominal imaging. To prevent further delays, the procurement and finance teams have evaluated three options: Two new ultrasound scanner models with identical features are available for purchase from different brands: Brand Cost of Machine Life of Machine Maintenance Cost Rate of Depreciation Year 1-5 Year 6-10 Year 11-15 Sonex 7,20,000 15 years 24,000 34,000 45,000 4% EchoMed 5,40,000 10 years 36,000 58,000 6% The residual value of both machines will drop by 1/3 of the purchase price in the first year, and thereafter shall be depreciated annually at the specified rate. Alternatively, EchoMed model can be taken on rent, which will be returned to the vendor after use, under the following terms and conditions: Annual Rent shall be paid in the beginning of each year and for first year it shall be - 1,18,000Annual Rent for the subsequent 4 years shall be - 1,18,500Annual Rent for the final 5 years shall be - 1,26,750 The rental agreement can be terminated early by paying a penalty of 1,10,000. This penalty would be reduced by - 11,000 each year of the period of rental agreement. The cost of capital for Medilab Diagnostics is 12%. Being a head of the finance department, you are required to answer the following question of the management (MCQs 1 to 5):