Question: In-Class 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.
| In-Class 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 | |||||||||
| Fixed Costs | |||||||||
| Variable Costs | |||||||||
| Depreciation | |||||||||
| BT operating income | |||||||||
| Taxes | |||||||||
| AT operating income | |||||||||
| Depreciation | |||||||||
| Net op. CF | |||||||||
| Assume inflation is 2% | |||||||||
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