A new procedure suite is being constructed at Marcy North Hospital. The investment for this procedure suite is $450,000 for equipment costs and $50,000 for renovations. The desired return on investment is 12 percent. Once the procedure suite was completed, 5,000 patients were served during the first year and charged $340 for each procedure. The annual fixed cost for the procedure room is $1 million and the variable costs per procedure is $129.
- What is the procedure room's profit?
- Did this profit meet its desired ROI?
- Why or why not?