Assignment:
Explain the methodologies and processes used in preparing budgets for health care organizations.
Apply research to create original insights and/or solve real-world problems.
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O
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Cash Revenues and Costs
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1
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2
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3
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4
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5
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1. System cost
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($2,000,000)
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2. Installation
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expenses
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(5oo,000)
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3. Total cost
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($2,500,000)
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4. Net revenues
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$750,000
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$787,500
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$826,875
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$868,219
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$ 911,630
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5. Labor costs
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(6o,000)
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(63,000)
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(66,150)
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(69,457)
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(72,930)
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6. Maintenance cost
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(150,000)
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(157,500)
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(165,375)
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(173,644)
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(182,326)
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7. Supplies
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(3o,o00)
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(31,500)
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(33,075)
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(34,729)
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(36,465)
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8. Net operating income
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$510,000
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$535,500
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$562,275
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$590,389
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$ 619,908
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9. Salvage value
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750,000
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to, Net cash flow
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($2,500,000)
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$510,000
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$535,500
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$562,275
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$590,389
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$1,369,908
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Profitability measures:
Net present value = $82,493
Internal rate of return =11.1%
• Bayside Memorial Hospital is considering purchasing a new MRI machine. Based on the cash flow analysis above would you recommend that the healthcare facility, Bayside Memorial Hospital, purchase an MRI machine?
In your analysis please review the following concepts: incremental cash flow, sunk cost, opportunity cost, strategic value, inflation effects.
Consider using the following outline to help you get started on your report:
• Introduce the report. What are you going to be covering? Who is the report addressed to?
• A detailed summary of cash flow analysis. What figures stood out to you? What figures do they need to aware of?
• You need to inform the reader what the numbers on your analysis mean. As per the instructions you need to discuss sunk costs, strategic value, incremental cash flow,opportunity cost, and inflation effects.
• Your recommendation. Please do not simply say "Yes, this is a great investment." Explain why. What is the profit margin and when will the company first see a profit?
Requirements
• Responses to the questions should be written in a clear, detailed manner and observe the conventions of Standard English (correct grammar, punctuation, etc.).
• Follow APA formatting for the title and reference page, as well as APA formatting within the paper itself (Times New Roman 12-point font and properly double spaced).
• The minimum page limit is 3 pages or 900 words.
• The maximum page limit is 4 pages or 1200 words.
• Information should be summarized in your own words with appropriate APA formatting and citation style of in-text citations in the body of the text to acknowledge the source(s) of information.
• Include at least two reference. The course textbook may count towards the reference requirement for this Assignment. All references will follow APA format.
• Follow the conventions of Standard English (correct grammar, sentence structure, punctuation, etc.).
• Your work should display superior content, organization, style, and mechanics.