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Accounting

Healthcare:

Fall City Healthcare System, a non- taxpaying entity, is gong to build a satellite ancillary facility. The tests will generate $15,000,000 per year in revenues for the next five years. The expected operating expenses, including depreciation, will increase expenses by 8,000,000 per year for the next five years. The initial cost for the building is $25,000,000, which will be depreciated on a straight- line basis to its salvage value. The salvage value at year 5 is $5,000,000. The cost of capital for this project is 9 percent.

Compute the net present value and internal rate of return to determine the financial feasibility of this project.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9411044

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