Marleboro Memorial Hospital is expecting its new cancer center to generate the following cash flows:

a. Determine the payback for the new cancer center.

b. Determine the net present value using a cost of capital of 12 percent.

c. Determine the net present value at 16 percent and the internal rate of return.

d. Based on net present value, should the project be accepted on a financial basis?

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Year 0 1 2 3 4 5 Initial ($1,000,000) investment Net operating $200,000 $300,000 $500,000 $300,000 $250,000 cash flows