For your analysis assume that the Center uses a 7% discount rate for projects of this risk level, and that they will initially use a five-year time horizon. This is a tax-exempt not-for-profit organization so there will not be any income tax effects to consider in the calculations. The business after buying the equipment is expected to generate gross revenues of $140,000 each year in the first two years and is expected to be $190,000 each year in the next two years, followed by $240,000 in the fifth year. The services will be paid for by third parties and there is a demand for this new service. Since the third-party payers will pay less than the full charge, assume that deductions from revenue to average 20% of gross revenues in each of the five years. The equipment cost is $425,000 and will cost $45,000 to install. After five years the equipment will be retired, and it is expected that it could be sold for $60,000. The costs for the service include part-time staffing costs of $13,000 and supply costs of $10,000 in each of the first two years. For the following two years, salaries are expected to be $15,000 and supplies are estimated to be $13,000; and in the last year five, salaries are expected to be $22,000 and supplies are expected to be $18,000. The equipment is under warranty in the first year so there is no extra fee paid. A maintenance contract costing $6,500 per year will be paid in years 2 through 5