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FIN - The Board of Trustees has decided that we should attempt




Question;The Board of Trustees has decided that we should attempt to expand our service offering. They want you to evaluate the information below and determine if this is a project we should move forward with. If your submission is not in Excel, you will earn a zero for this assignment.The MRI Trailer costs $600,000 and has an expected life of 5 years with an estimated salvage value of $200,000 at that time. After some extensive research, the numbers we have come up with look like this:15 tests per day for 250 days per year for each year of the projects lifeEach procedure is expected to generate $80 in cash collections during the first year of use (Net revenue for year 1 is 15*250*80=$300,000)Labor and Maintenance costs are expected to be $100,000 during the first yearUtilities will cost $10,000 in year one and there is an incremental overhead increase of $5,000 beginning in year oneCost for expendable supplies is expected to be $5 per procedureCosts and revenues are expected to increase at a 5% inflation rateOur corporate cost of capital is 10%In the Excel spreadsheet template:estimate the project's net cash flow over the 5 year estimated life. I want you to use the properties (formulas) in Excel here.determine the project's NPV and IRR (Use the excel formulas to determine this as well)Is this a project we should move forward with? (Consider NPV and strategic value here)---This can be written in text into your excel sheet.


Paper#48308 | Written in 18-Jul-2015

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