Question
A large community hospital is considering buying a robot to perform robotic surgeries. The cost of the technology is $20 million, the set-up costs are
A large community hospital is considering buying a robot to perform robotic surgeries. The cost of the technology is $20 million, the set-up costs are $0.5 million. The management estimates that it will cost them about $5 million in foregone revenue to train physicians and other staff to operate the unit in the first year of operation. After that, the robot is expected to bring $3 million per year that will grow at 7% annually. The cost of capital is 10%. Should the hospital pursue this investment? Why or why not?
A large community hospital is considering buying a robot to perform robotic surgeries. The cost of the technology is $20 mil, the set-up costs are $0.5 mil. The management estimates that it will cost them about $5 mil in foregone revenue to train physicians and other staff to operate the unit in the first year of operation. After that, the robot is expected to bring $3 mil per year that will grow at 7% annually. The cost of capital is 10%. Should the hospital pursue this investment? Why or why not Step by Step Solution
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Small Business Management Launching and Growing New Ventures
Authors: Justin Longenecker, Leo Donlevy, Terri Champion, William Petty, Leslie Palich, Frank Hoy
6th Canadian edition
176532218, 978-0176532215
