Non-Profit Hospital plans to invest in a new MRI machine. The cost of the MRI...
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Non-Profit Hospital plans to invest in a new MRI machine. The cost of the MRI is $1.8 million. The MRI has an economic life of 5 years, and it will be depreciated over a five-year life to a $200,000 salvage value. Additional revenues attributed to the new MRI will be for $1.6 million per year for 5 years. Additional operating expenses, excluding depreciation expense, will amount to $1.2 million per year for 5 years. Over the machine's life, net working capital will increase by $35,000 per year for 5 years. Assuming that the hospital is a non-profit entity, what is the projects net present value (NPV) at a discount rate of 10%, and what is the projects IRR?
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