Alameda Hospital is expecting its new cancer center to generate the following cash flows: Givens Years 0 1 2 3 4 5 Initial investment ($30,000,000) Net operating cash flows $6,000,000 $8,000,000 $16,000,000 $20,000,000 $30,000,000 Determine the payback for the new cancer center in years. Determine the net present value (NPV) using a cost of capital of 15%. Determine the NPV at a cost of capital of 20%.
Alameda Hospital is expecting its new cancer center to generate the following cash flows: Givens Years 0 1 2 3 4 5 Initial investment ($30,000,000) Net operating cash flows $6,000,000 $8,000,000 $16,000,000 $20,000,000 $30,000,000 Determine the payback for the new cancer center in years. Determine the net present value (NPV) using a cost of capital of 15%. Determine the NPV at a cost of capital of 20%.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 2CE
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Alameda Hospital is expecting its new cancer center to generate the following
Givens | Years | 0 | 1 | 2 | 3 | 4 | 5 |
Initial investment | ($30,000,000) | ||||||
Net operating cash flows | $6,000,000 | $8,000,000 | $16,000,000 | $20,000,000 | $30,000,000 | ||
- Determine the payback for the new cancer center in years.
- Determine the
net present value (NPV) using a cost of capital of 15%. - Determine the NPV at a cost of capital of 20%.
- Determine the
internal rate of return (IRR) using a cost of capital of 20%. - Should the project be accepted at a cost of capital of 15%?
- Should the project be accepted at a cost of capital of 20%?
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