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 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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