Capital Cash Flow Estimation Exercise
Information to Solve Case
1) Assume Bloomington Indiana Mellencamp Health System, a not-for profit hospital, is evaluating a new MRI.
2) Cost
	Purchase price		$500,000
	Shipping and Install		$80,000
3) Expected life			5 years
4) Salvage Value			$250,000
5) Utilization			6000 scans per year
6) Net Revenue			$150 per scan
7) Variable Cost			$75 per scan
8) Fixed cost			$150,000
9) Corporate cost of capital			12%
Calculate the operating cash flow
			Year 1	Year 2	Year 3	Year 4
Revenue
Total Fixed Cost
Fixed Costs
Depreciation
BT operating income
Taxes
AT operating income
Depreciation
Net op. CF