Differential Sunk Opportunity Item Cost Cost Cost Ex. Cost of X-ray film used in the old machine 1. Cost of the old X-ray machine ..... 2. The salary of the head of the Radiology Department... 3. The salary of the head of the Laboratory Department. . 4. Cost of the new color laser printer..... 5. Rent on the space occupied by Radiology.. 6. The cost of maintaining the old machine . 7. Benefits from a new DNA analyzer ..... 8. Cost of electricity to run the X-ray machines...

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22. Glenn Medical Center has seen a growth in patient volume since its primary competitor decided to relocate to a different area of the city. To accommodate this growth, a consul- tant has advised Glenn Medical to invest in a positron-emission tomography (PET) scanner. The cost to implement the unit would be $4,000,000. The useful life of this equip- ment is typically about six years, and it will be depreciated over a six-year life to a $400,000 salvage value. Additional patient volume will yield $3,000,000 in new revenues the first year. These first-year total revenues will increase by $600,000 each year thereafter, but the unit is expensive to operate. Additional staff and variable costs, excluding depreciation expense, will come to $2,200,000 the first year, but these expenses are expected to rise by $400,000 each year thereafter. Over the life of the machine, net working capital will increase by $18,000 per year for six years. a. Assuming that Glenn Medical Center is a…

An electric utility is considering a new power plant in northern Arizona. Power from the plant would be sold in the Phoenix area, where it is badly needed. Because the firm has received a permit, the plant would be legal; but it would cause some alr pollution. The company could spend an additional $40 million at Year 0 to mitigate the environmental problem, but it would not be required to do so. The plant without mitigation would require an initial outlay of $210.55 million, and the expected cash Inflows would be $70 million per year for 5 years. If the firm does Invest in mitigation, the annual inflows would be $75.20 million. Unemployment in the area where the plant would be built is high, and the plant would provide about 350 good jobs. The risk adjusted WACC is 19%. a. Calculate the NPV and IRR with mitigation. Enter your answer for NPV in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not…