St David's North Austin Medical Center, an HCA owned for$-$profit

hospital, is evaluating the purchase of new diagnostic equipment.

The equipment, which costs $$700,000,$ has an expected life of five

years and an estimated pretax salvage value of $$225,000$ at that

time. The equipment is expected to be used $15$ times a day for $275$

days a year for each year of the project's life. On average, each

procedure is expected to generate $$175$ in collections, which is net

of bad debt losses and contractual allowances, in its first year of

use. Thus, net revenues for Year $1$ are estimated at $15$ X $275$ X $$175$

$=$ $$721,875.$ Labor and maintenance costs are expected to be $$175,000$

during the first year of operation, while utilities will cost

another $$10,000$ and cash overhead will increase by $$5,000$ in Year

$1.$ The cost for expendable supplies is expected to average $$50$ per

procedure during the first year. All costs and revenues, except

depreciation, are expected to increase at a $3$ percent inflation

rate after the first year. The equipment falls into the MACRS

five$-$year class for tax depreciation and hence is subject to the

following depreciation allowances: Year Allowance $10\mathrm{.}220\mathrm{.}323$

$0\mathrm{.}1940\mathrm{.}1250\mathrm{.}1160\mathrm{.}06$ The hospital's aggregate tax rate is $32$

percent, and its corporate cost of capital is $10$ percent. What is

the project's NPV$?$ Format is $xxx$,$xxx or $($$xxx$,$xxx$)$ What is the

project's IRR? Format is xx$.$xx$\%$ Based on the results of the

analysis, should this project be approved? Format is Yes or

No$$