Assume Bloomington Indiana Mellencamp Health System, a not-for profit hospital, is evaluating a new MRI and assume inflation is 2%. Calculate the operating cash flow for years 1 through 4.

• Cost
• Purchase Price: $500,000
• Shipping and Install: $80,000
• Expected Life
• 5 years
• Salvage Value
• $250,000
• Utilization
• 6000 scans per year
• Net Revenue
• $150 per scan
• Variable Cost
• $75 per scan
• Fixed Cost
• $150,000
• Corporate cost of capital
• 12%

Year 1 Year 2 Year 3 Year II Revenue Fixed Goete Variable Coete Depreciation ET operating fnmme Taxes A T operating inoome Depreciation Netop. CF