1 Required information Humana Hospital Corporation installed a new MRI machine a

Question

1 Required information Humana Hospital Corporation installed a new MRI machine at a cost of $740,000 this year in its medical professional clinic in Cedar Park. This state-of-the-art system is expected to be used for 6 years and then sold for $115,000. Humana uses a return requirement of 28% per year for all of its medical diagnostic equipment. As a bioengineering student currently serving a Co-op semester on the managementstaff of Humana Corporation in Louisville, Kentucky, you are asked to determine the minimum revenue required each year to realize the expected recovery and return What is your answer? The minimum revenue required each year to realize the expected recovery and return is $

Explanation / Answer

Investment in Equipment -740000 Less: Present Value of salvage value 26148 (115000*0.227374) Present value of Net outflows 713852 Divide: Annuity factor ffor 6 yrs at 28% 2.75938 Annual revenue required 258700.1

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