For this assignment, you will need to make forecasts for Model A and Model B as described below and submit your worksheets as part of your assignment. The question you will need to answer is:

Should the company sell Model A and buy Model B?

MRI MODEL A

MRI MODEL B

Machine is 60 months old. Remaining useful life is 48 months. Original capitalized cost was $630,000. Depreciation is straight-line. Depreciation value is $120,000. It is estimated that the machine can be sold for $250,000. Operates 25 days per month. Each image has a variable cost of $1,200. Patient charge per image is $2,000.

Machine is new. Remaining useful life is 48 months. Original cost was $690,000. Transportation costa are $15,000. Installation costs are $30,000. Depreciation is straight-line. Salvage value is $60,000. Operates 26 days per month. Capable of 40 images per day. Initially each image has a variable cost of $900. In any given month, once 540 images have been taken then the variable costs decline to $800. Patient charge per image is $2,000.

Company Specific Information:

• Tax rate is 30%
• The current Risk Free Rate is 2.60%
• The Equity Risk Premium is 6.70%
• The Industry Risd Premium is 1.23%
• The Company Size Premium is 4.00%
• The Company has a preferred stock:
  • Pav Value equals $25
  • The Divident is $2.50
• Company borrows at 8%
• Currently there is a $50mm in debt
• The payment on the debt is $418,200 per month
• There are 20 years remaining on Debt.
• The Bottom Right Balance Sheet is:

	Long Term Debt	$50mm
	Preferred Stock	$25mm
	Shareholder Equity	$25mm
		$100mm