Humana Hospital Corporation installed a new MRI machine at a cost of $760,000 this year in its medical professional clinic in Cedar Park. This state-of-the-art system is expected to be used for 5 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 management staff of Humana Corporation in Louisville, Kentucky, you are asked to a) Determine the minimum revenue required each year to realize the expected recovery and return. b) If the annual operating cost (AOC) is expected to be $100,000 per year, determine the total amount of AW.
Humana Hospital Corporation installed a new MRI machine at a cost of $760,000 this year in its medical professional clinic in Cedar Park. This state-of-the-art system is expected to be used for 5 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 management staff of Humana Corporation in Louisville, Kentucky, you are asked to a) Determine the minimum revenue required each year to realize the expected recovery and return. b) If the annual operating cost (AOC) is expected to be $100,000 per year, determine the total amount of AW.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Humana Hospital Corporation installed a new MRI machine at a cost of $760,000 this year in its
medical professional clinic in Cedar Park. This state-of-the-art system is expected to be used for 5
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 management staff of Humana Corporation in Louisville, Kentucky, you are asked to
a) Determine the minimum revenue required each year to realize the expected recovery and
return.
b) If the annual operating cost (AOC) is expected to be $100,000 per year, determine the total
amount of AW.
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