Create scenarios for the three rate of returns (e.g. 5%, 10%, 15%) using their respective fact pattern. Assign a probability to each rate of return and calculate the expected rate of return.

The radiology department is requesting a new MRI. The current MRI is at 90% capacity and can scan 1 patient per hour. The average scan takes 45 minutes and turning over the room takes 15 minutes. The scanner is operated Monday through Friday from 8 a.m. to 7 p.m. There have been vast improvements made in MRI equipment and software since the installation of the MRI. The radiology department has requested a new machine that will reduce the scan time from 45 minutes to 15 minutes.

Radiology Team Key Facts Per Scan Total 1,288 3,220,000 2,500 Current Volume Revenue Fixed Costs Per Scan Comprehensive Maintenance Labor Cost Building Cost Variable Costs Per Scan Material Costs Electricity Cost Water Cost 184,998 759,950 180,000 1,443 593 140 319,229 217,740 1,842 Current Capacity 90% Radiology Team Key Facts Per Scan Total 1,288 3,220,000 2,500 Current Volume Revenue Fixed Costs Per Scan Comprehensive Maintenance Labor Cost Building Cost Variable Costs Per Scan Material Costs Electricity Cost Water Cost 184,998 759,950 180,000 1,443 593 140 319,229 217,740 1,842 Current Capacity 90%