Using all of the information about the MRI purchase and projected utilization below, answer the following questions.

Purchase price in period zero: 1 million

Annual fixed cost in year 1 (maintenance, personnel, etc: NOT DEPRECIATION): 500,000

Variable cost per case: $200

Revenue per case: $2300

Projected volume (year 1): 350 cases per year, projected to grow by 3% per year.

Growth rate for fixed and variable expenses and revenues per case): 3%

Tax Rate: 0 (Non profit!)

Question: If the project has a 5 year life with no terminal value and the Corporate Cost of Capital is 15%, what is the NPV of the project?

If the only consideration is financial (ie there are no strategic or mission driven reasons for adopting this project), should Greenwood imaging proceed? (YES OR NO)

If the organization were a for profit corporation but otherwise had the exact same cost structure as Greenwood, would the NPV be higher or lower than it is for the NP (where the tax shield from depreciation is zero)? (HIGHER OR LOWER)