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2) A regional hospital wants to buy a building available in downtown area of that town. They would like to analyze the financial viability of

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2) A regional hospital wants to buy a building available in downtown area of that town. They would like to analyze the financial viability of using that building to set up an extension of radiology department. The plan is to start a new MRI unit there as starting a single section would be easier. However, they would like to open a CT Scan unit, in addition, in case the MRI unit alone is not profitable. A Systems Engineer has been assigned to gather data and forecast volumes, and to perform cost estimation. The results are given below. Building costs per year-$200,000 For MRI: Equipment and other fixed costs per year $350,000 Net Revenue per MRI, after subtracting variable costs $325 Expected No. of MRI scans per year 1300 For CT Scan: Equipment and other fixed costs per year - S150,000 Net Revenue CT Scan, after subtracting variable costs $100 Expected No. of CT scans per year - 3500 Compute the results to see if (a) MRI unit alone can be profitable, or (b) Both MRI and CT Scan put together will be profitable

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