Option A: Building a New Wing 1. One-Time Costs: - Land \& site preparation: $10 million (Year 0) - Construction: $100 million ( $50 million in Year 0 and $50 million in Year 1) - Medical equipment: $25 million (Year 0) - Licensing and consulting: \$15 million (spread across Years 0 and 1) - Initial marketing campaign: \$5 million (Year 2) 2. Annual Values: - Operations \& staff: \$11 million/year (Year 2 onwards) - Maintenance: \$2.5 million/year (Year 2 onwards) - Technology updates: $1.5 million/year (Year 4 onwards) 3. Overhauls: - Equipment repairs: $18 million (Year 10) - Facility upgrades: $25 million (Year 15) 4. Revenue: - From Year 3 to 10: Starting at $60 million and increasing by $5 million annually. - From Year 11 onward: Stabilizing at $100 million annually, - Salvage Value of existing equipment: \$25 million (Year 20) Option B: Upgrading Existing Infrastructure 1. One-Time costs: - Renovations: $35 million (Year 0) - Medical equipment: $20 million (Year 0 ) - Licensing \& consulting: $5 million (Year 0 ) - Initial marketing campaign: \$2 million (Year 1) 2. Annual Values: - Operations \& additional staff: \$7 million/year (Year 2 onwards) - Maintenance: \$2 million/year (Year 2 onwards) - Technology updates: $1.2 million/year (Year 3 onwards) 3. Overhauls: - Equipment repairs: $13 million (Year 10) - Facility upgrades: $20 million (Year 15 ) 4. Revenue: - From Year 2 to 9: Starting at $18 million and increasing by $5 million annually. - From Year 10 onward: Stabilizing at $58 million annually. - Salvage Value: $15 million (Year 20 ) Question 5 - Assuming that the initial equipment can be depreciated over the course of 20 years and using Double Decline Balance Depreciation, calculate the depreciation schedule for the equipment