subject
Business, 30.06.2020 02:01 tartcandi303

Dr. Magneto is evaluating whether to open a private MRI clinic in leased office space in a local strip mall. The clinic will run for two years and then close. Before the clinic opens, the offices require $200,000 of renovations. Dr. Magneto will buy $20,000 of computer equipment and one MRI machine. The MRI machine (GE 3.0T Signa Excite HD) costs $2.4M. Assume that the renovations, computer equipment and MRI are paid for at the beginning of the first year (t=0) and that all three are classified as 15-year property. Assume that the MRI machine will be sold for $500,000 at the end of the second year of business. The computer equipment will be worthless at that time. The clinic can perform 72 scans per week for 49 operational weeks per year. The clinic will charge $600 per scan.
The clinic will need two technicians, two receptionists and one office manager. Wages, salaries and other payroll costs (i. e., health insurance premiums) will total $275,000 per year. Maintenance, supplies, marketing and operating costs for the machine are expected to be $200,000 per year. Annual rent is $60,000 payable at the end of each year. Assume that all revenues (and expenses) occur at the end of the year. The tax rate is 40% and Dr. Magneto's cost of capital is 10%. What are the operating cash flows at the end of Year 1?
MACRS Depreciation Rates
Year 10-Year 15-Year
1 10.00% 5.00%
2 18.00% 9.50%
3 14.40% 8.55%
a. $997,080
b. $1,001,480
c. $1,053,880
d. $1,037,480

ansver
Answers: 1

Another question on Business

question
Business, 21.06.2019 19:00
Spirula trading inc sublets a part of its offices building to jade inc. for a period of ten years . where will the company disclose this information?
Answers: 3
question
Business, 22.06.2019 02:30
Acompany using the perpetual inventory system purchased inventory worth $540,000 on account with credit terms of 2/15, n/45. defective inventory of $40,000 was returned 2 days later, and the accounts were appropriately adjusted. if the company paid the invoice 20 days later, the journal entry to record the payment would be
Answers: 1
question
Business, 22.06.2019 06:40
Burke enterprises is considering a machine costing $30 billion that will result in initial after-tax cash savings of $3.7 billion at the end of the first year, and these savings will grow at a rate of 2 percent per year for 11 years. after 11 years, the company can sell the parts for $5 billion. burke has a target debt/equity ratio of 1.2, a beta of 1.79. you estimate that the return on the market is 7.5% and t-bills are currently yielding 2.5%. burke has two issuances of bonds outstanding. the first has 200,000 bonds trading at 98% of par, with coupons of 5%, face of $1000, and maturity of 5 years. the second has 500,000 bonds trading at par, with coupons of 7.5%, face of $1000, and maturity of 12 years. kate, the ceo, usually applies an adjustment factor to the discount rate of +2 for such highly innovative projects. should the company take on the project?
Answers: 1
question
Business, 22.06.2019 10:10
At the end of year 2, retained earnings for the baker company was $3,550. revenue earned by the company in year 2 was $3,800, expenses paid during the period were $2,000, and dividends paid during the period were $1,400. based on this information alone, retained earnings at the beginning of year 2 was:
Answers: 1
You know the right answer?
Dr. Magneto is evaluating whether to open a private MRI clinic in leased office space in a local str...
Questions
question
Medicine, 26.10.2020 05:00
question
Mathematics, 26.10.2020 05:00
question
Biology, 26.10.2020 05:00
question
History, 26.10.2020 05:00
Questions on the website: 13722365