Capital Budgeting Discussion: Analyzing Healthcare Machine Investments

This discussion post revolves around capital budgeting, specifically focusing on investments in MRI and X-ray machines within a hospital setting. The author responds to two classmates, Brett and Aisha, providing feedback on their initial posts. The response to Brett appreciates the selection of the MRI machine as a capital cost due to its expense and long-term business enhancement potential, suggesting the inclusion of spare parts costs in addition to maintenance. The response to Aisha acknowledges the importance of the X-ray machine and emphasizes its role in building the hospital's earning capacity, while also pointing out the omission of maintenance costs and the long-term impact of capital expenditures on business capacity. The discussion highlights the critical aspects of capital budgeting in healthcare, including cost analysis, long-term impact, and maintenance considerations.

Running head: DISCUSSION
DISCUSSION
Name of the Student
Name of the University
Author Note

1DISCUSSION
Response to Brett Abram
Dear Brett,
I read your post and appreciate the choice of the MRI machine as made by you. The machine is
defined as a capital cost because it is expensive and will be used for the long term business
enhancement. In addition to this, you have also mentioned that there are several maintenance
costs associated with it. However, I believe that along with the different maintenance costs, there
also exists costs of the spare parts. Very often the machines break down and then in addition to
the maintenance costs there also exists certain repair costs which are very high in nature. Hence,
I recommend you to add these costs in your discussion. Thank you.
Response to Aisha Gardner
Dear Aisha,
I read your post and appreciate your choice of machine. The X-ray machine definitely forms a
crucial part of any hospital and allows the different doctors to analyze the health of the patient
without undergoing any surgeries and it is in fact a costly machine. However, I would like to
state that, one aspect that you did not mention in your post is the manner in which the X-ray
machine builds up the earning capacity of the business in the hospital. You have rightfully
mentioned that the costly machines need to be capitalized by the hospitals but then, the capital
expenditures can also be stated as those, whose impact on the business is long term and that, it
increases the capacity of the business. Moreover, you missed out on its maintenance costs as
well. I would recommend you to kindly include the reasons stated above. Thank you

2DISCUSSION
References and Bibliography
Andor, G., Mohanty, S. K., & Toth, T. (2015). Capital budgeting practices: A survey of Central
and Eastern European firms. Emerging Markets Review, 23, 148-172.
Burns, R., & Walker, J. (2015). Capital budgeting surveys: the future is now.