Question: 2. Heartfield Hospital is considering adding an additional Operating Room Suite. It is expected that the initial investment will cost $15,600,000. Estimates for revenues

2. Heartfield Hospital is considering adding an additional Operating Room Suite. It

2. Heartfield Hospital is considering adding an additional Operating Room Suite. It is expected that the initial investment will cost $15,600,000. Estimates for revenues and expenses over a six-year time horizon are as follows, as well as equipment salvage value at the end of year 6: Net Revenue Operating Expense Salvage Value Years 1 2 4 5 $1,540,000 $2,540,000 $2,100,000 $3,300,000 $7,000,000 $9,700,000 $1,000,000 $1,000,000 $750,000 $ 555,000 $610,000 $ 800,000 $ 100,000 a) Assuming a cost of capital of 7%, calculate the Net Present value (NPV) for the Operating Room Suite addition. (1.5 points)

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