Please help to solve, make sure you include EQUATIONS and FUNTIONS plzzzzz! Real apreciated!

2 Problem Set 5 Chapter 11 Capital Budgeting 5 Assigned Problem 3 6 California Health Center, a for-profit hospital, is evaluating the purchase of new diagnostic 7 equipment. The equipment, which costs $600,000, has an expected life of five years and an estimated 8 pretax salvage value of S200,000 at that time. The equipment is expected to be used 15 times a day 9 for 250 days a year for each year of the project's life. On average, each procedure is expected to 10 generate $800 in collections, which is net of bad debt losses and contractual allowances, in its first 11 ar of use. Thus, net revenues for Year 1 are estimated at 15 x 250 x S80-$300,000. 13 Labor and maintenance costs are expected to be s100,000 during the first year of operation, while 14 utilities will cost another $10,000 and cash overhead will increase by $5,000 in Year 1.The cost for 15 expendable supplies is expected to average S5 per procedure during the first year. All costs and 16 revenues, except depreciation, are expected to increase at a 5percent inflation rate after the first year. 18 The equipment falls into the MACRS five-year class for tax depreciation and hence is subject to the 19 following depreciation allowances Yar 21 Allowance 23 0.32 24 0.19 25 0.12 26 0.11 0.06 29 The hospital's tax rate is 40 percent, and its corporate cost of capital is 10 percent. 80 a. Estimate the project's net cash flows over its five-year estimated life. 31 b. What are the project's NPV and IRR? (Assume that the project has average risk.) 2 Problem Set 5 Chapter 11 Capital Budgeting 5 Assigned Problem 3 6 California Health Center, a for-profit hospital, is evaluating the purchase of new diagnostic 7 equipment. The equipment, which costs $600,000, has an expected life of five years and an estimated 8 pretax salvage value of S200,000 at that time. The equipment is expected to be used 15 times a day 9 for 250 days a year for each year of the project's life. On average, each procedure is expected to 10 generate $800 in collections, which is net of bad debt losses and contractual allowances, in its first 11 ar of use. Thus, net revenues for Year 1 are estimated at 15 x 250 x S80-$300,000. 13 Labor and maintenance costs are expected to be s100,000 during the first year of operation, while 14 utilities will cost another $10,000 and cash overhead will increase by $5,000 in Year 1.The cost for 15 expendable supplies is expected to average S5 per procedure during the first year. All costs and 16 revenues, except depreciation, are expected to increase at a 5percent inflation rate after the first year. 18 The equipment falls into the MACRS five-year class for tax depreciation and hence is subject to the 19 following depreciation allowances Yar 21 Allowance 23 0.32 24 0.19 25 0.12 26 0.11 0.06 29 The hospital's tax rate is 40 percent, and its corporate cost of capital is 10 percent. 80 a. Estimate the project's net cash flows over its five-year estimated life. 31 b. What are the project's NPV and IRR? (Assume that the project has average risk.)