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Calculate the NPV of the project Answer^, please explain through excel how to achieve these numbers Dr. Hunter Thompson is considering opening an MRI clinic
Calculate the NPV of the project
Answer^, please explain through excel how to achieve these numbers
Dr. Hunter Thompson is considering opening an MRI clinic in Aspen. The business will operate for three years. The MRI machine, a GE, costs $2.6M and will be delivered immediately. The machine is in Class 43 with a depreciation rate of 30%. The machine can be sold for $500,000 at the end of the three years. Dr. Thompson estimates that he can perform 2,500 scans annually at $700 per scan for $1.75M of annual revenues. Dr. Thompson will lease office space in a local strip-mall and estimates that annual operating expenses will be $550,000 (including rent, salaries, and wages). Dr. Thompson plans to offer credit to his customers. He expects to have about 45 days of sales in accounts receivable, or about $300,000. He has arranged venture funding from Oscar Acosta who expects a return of 10% on his invested capital. The tax rate is 35%. Answer the following questions to determine if the project is worth undertaking. NPV=$2,900,000+(1.1)$916,5000+(1.1)2$1,012,050+(1.1)3$1,895,466=$193,663.60Step by Step Solution
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