Medical Equipment Supplies Inc. (MESI) has lost 16% market share in Medical Equipment sales in 2018. MESI serves more than 24,800 B2B clients and operates on a North Central
Positronics System that is not compatible with the systems used by their major clients
Shopper's Drug Mart and Loblaw's who have all upgraded to a reputable Microsoft
Platform
A project to upgrade their systems is being considered. The estimated total upgrade will
take place over the Jan - December 2018 period and payback of the project will be
measured over a 4-year life. The loan of $928,000 is taken from the Royal Ontario Bank at
a rate of 6.5% and estimates are that revenues of $195,000 in year 1, $224,000 in year 2,
and a maximum amount of $300,000 in each of the years remaining in the period. The
project estimates also include the sale of older equipment for $25,000 as scrap.
Create an analysis of the Project Value to MESI and give reasons for whether this project
should be accepted or not using three Methods of Evaluation: NPV, BCR and Payback.
A) CALCULATIONS: