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In-Class Cash Flow Estimation Exercise Information to Solve Case 1) Assume Bloomington Indiana Mellencamp Health System, a not-for profit hospital, is evaluating a new MRI.
In-Class Cash Flow Estimation Exercise | |||||||||
Information to Solve Case | |||||||||
1) Assume Bloomington Indiana Mellencamp Health System, a not-for profit hospital, is evaluating a new MRI. | |||||||||
2) Cost | |||||||||
Purchase price | $500,000 | ||||||||
Shipping and Install | $80,000 | ||||||||
3) Expected life | 5 years | ||||||||
4) Salvage Value | $250,000 | ||||||||
5) Utilization | 6000 scans per year | ||||||||
6) Net Revenue | $150 per scan | ||||||||
7) Variable Cost | $75 per scan | ||||||||
8) Fixed cost | $150,000 | ||||||||
9) Corporate cost of capital | 12% | ||||||||
Calculate the operating cash flow | |||||||||
Year 1 | Year 2 | Year 3 | Year 4 | ||||||
Revenue | |||||||||
Fixed Costs | |||||||||
Variable Costs | |||||||||
Depreciation | |||||||||
BT operating income | |||||||||
Taxes | |||||||||
AT operating income | |||||||||
Depreciation | |||||||||
Net op. CF | |||||||||
Assume inflation is 2% |
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