use Description:

Sunshine Hospital, one of few for$-$profit hospitals owned by private equity firms in Missouri, has been facing increasing demand for diagnostic imaging services due to a growing population and the rising prevalence of chronic diseases. Over the last year, $80$ percent of the population required diagnostic imaging related to procedures in gastroenterolopy, gynecology, ophthaimoiogy, otolaryngology, orthopedics, plastic surgery, and urology. However, the hospital's existing imaging equipment is outdated, resulting in longer wait times and lower$-$quality images. It is clear to the management of Sunshine Hospital that the current equipment is no longer capable of keeping up with the ongoing demand for services. After a comprehensive evaluation, the hospital's management team identifies a state$-$of$-$the$-$art imaging system that would significantiy enhance diagnostic capabilities and patient care. One of the imaging equipment that the hospital lacks, but needs to add to support cancer patients, is a PET scan. To safely install the new PET scan, extensive renowations to the East Wing of the hospital will also be required. The total amount of the renovations and the new imaging systems will be $$10$ million. Yet, Sunshine Hospital anticlpates enhanced revenue of $$750,000$ each year resulting from seeing more patients in the larger expansion of the East Wing, in addition to the improved patient safety resulting from more accurate diagnostic imaging from the newer equipment, despite seeing increased operating costs of $$150,000.$

The hospital only has enough liquid cash reserves to support $$4$ million for this project. The balance must be achieved between two financing options to acquire the desperately needed new imaging equipment and associated renovations. These options include;

Debt Financing: Taking out a loan from a Bank$101.$ The terms being offered include $20\%$ cash down payment $($of the $$6$ million loan$),$ and financing the remainder at $5\%$ interest rates, with the loan to be repaid over $5$ years.

Equity Financing: The hospital is organized as a corporation. In exchange for the additional capital for hospital, a new investor would purchase shares of newly issued stock and become a shareholder $($i$.$e$.$ owner$)$ of the hospital.

in other situation, the Sunshine Health must pay the standard corporate tax of $21\%.$

ions:

Create a simplified projected profit and loss statement for the first vear of Sunshine Hospital based on the above information, filling in the table below with the missing values.

Sunshine Hospital, Simplified Profit and Loss Statement

$\backslash$table$[[,$Debt Financing Option,Equity Financing Option$],[$equisy rinantinguption$],[\backslash$table$[[$Operating Costs$],[$Operating$],[$Income$],[$Interest Expense$]],,],[$Taxable Income,,$],[Taxes(21\%),,],[$Profit$,,],[$Retum on Equity,,$]]$