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The RADIOLOGY DEPARTMENT Of St. St joseph’s hospital , a not for profit is considering purchasing a magnetic resonance (MRI) machine. The cost of the machine to purchase and install is approximately $2,000,000. Assume St Josephs would like a minimum 8 percent return and the economic life of the machine is expected to have a life of 10 years. The machine has no salvage value.

If the MRI is installed, the cash flows are expected to increase by $300,000 per year.

Required

A. Find the NPV of the MRI

B. Should the hospital acquire the MRI

C. What nonfinancial considerations might be important to the MRI DECISION?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93046972

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