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The Navicent Health in Macon, Georgia, expends $270 million in September 2021 to install a new Magnetic Resonance Imaging (MRI) machine. This system is
The Navicent Health in Macon, Georgia, expends $270 million in September 2021 to install a new Magnetic Resonance Imaging (MRI) machine. This system is expected to be used for 10 years and then sold for $15 million. The annual operating cost of the MRI system is expected to be $120,000 per year. The Navicent Health uses 15% per year rate of return for all of its medical diagnostic equipment. As a Mercer engineering student currently serving a co-op semester on the management staff at the Navicent Health in Macon, you are asked to determine the minimum revenue required each year to realize the expected recovery and return. Draw cash flow diagram and find the total revenue required to provide for recovery of capital and the annual expenses.
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