Baghiben Humana Hospital Corporation installed a new MRI machine at a cost of $810000 this year in its medical professionalclinic in Cedar Park. This state-of-the-art system is expected to be used for 6.00 years and then sold for $110000.Humana uses a return requirement of 26.00% per year for all of its medical diagnostic equipment. As a bioengineeringstudent currently serving a Co-op semester on the management staff of Humana Corporation in Louisville, Kentucky,you are asked to determine the minimum revenue required each year to realize the expected recovery and return.If the annual operating cost (AOC) is expected to be $110000 per year, what is the total required to provide for recovery of capital andthe annual expenses at the specified rate of return?The total required to provide for recovery of capital and the annual expenses at the specified rate of return is determined to be $

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Answered: Humana Hospital Corporation installed a…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 13E

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Humana Hospital Corporation installed a new MRI machine at a cost of $750,000 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 $125,000. Humana uses a return requirement of 15% per year for all of its medical diagnostic equipment. As a bioengineering student currently serving a coop semester on the management staff of Humana Hospital Corporation in Louisville, Kentucky, you are asked to determine the minimum revenue required each year to realize the expected recovery and return. If the AOC is expected to be $80,000 per year, what is the total revenue required to provide for recovery of capital, the 15% return, and the annual expenses? -258917 -343654 -285197 -334654
Emmons Lawn Maintenance (ELM) provides lawn and garden care for residential properties. In the current year, ELM maintains 75 properties and earns an average of $5,000 annually for each property. The owner of ELM is planning for the coming year. New building in the area is expected to increase volume by 20 percent. In addition, the owner estimates that the number of homeowners that will want ELM's service will increase by 10 percent. ELM plans to increase the price of service by 12.5 percent to cover expected increased wage and equipment costs. Estimate revenues for Emmons Lawn Maintenance for the coming year.
Emmons Lawn Maintenance (ELM) provides lawn and garden care for residential properties. In the current year, ELM maintains 76 properties and earns an average of $5,200 annually for each property. The owner of ELM is planning for the coming year. New building in the area is expected to increase volume by 21 percent. In addition, the owner estimates that the number of homeowners that will want ELM's service will increase by 11 percent. ELM plans to increase the price of service by 13.0 percent to cover expected increased wage and equipment costs. Required: Estimate revenues for Emmons Lawn Maintenance for the coming year. Note: Enter your answer rounded to the nearest whole dollar.
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Emmons Lawn Maintenance (ELM) provides lawn and garden care for residential properties. In the current year, ELM maintains 93 properties and earns an average of $8,600 annually for each property. The owner of ELM is planning for the coming year. New building in the area is expected to increase volume by 38 percent. In addition, the owner estimates that the number of homeowners that will want ELM's service will increase by 28 percent. ELM plans to increase the price of service by 21.5 percent to cover expected increased wage and equipment costs. Required: Estimate revenues for Emmons Lawn Maintenance for the coming year. Note: Enter your answer rounded to the nearest whole dollar. > Answer is complete but not entirely correct. 1,661,140 Revenues
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A new installation technique has been developed that will enable Washington’s engineers to install 7 additional units of equipment a year. The new method will increase installation costs by $145,000 each year. Should Washington implement the new technique? Show your calculations.
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New Pharm Corporation is a rapidlygrowing biotech company that has a required rate of return of 14%. It plans to build a new facility in SantaClara County. The building will take 2 years to complete. The building contractor offered New Pharm achoice of three payment plans, as follows: ■ Plan I: Payment of $175,000 at the time of signing the contract and $4,700,000 upon completion of thebuilding. The end of the second year is the completion date. ■ Plan II: Payment of $1,625,000 at the time of signing the contract and $1,625,000 at the end of each ofthe two succeeding years. ■ Plan III: Payment of $325,000 at the time of signing the contract and $1,500,000 at the end of each of thethree succeeding years. Q. Using the net present value method, calculate the comparative cost of each of the three payment plansbeing considered by New Pharm.
The Culinary Institute is considering a classroom remodeling project. The cost of the remodel would be $350,000 and will be depreciated over six years using the straight- line method. The model will acoomoodate five extra student per year. Additional information related to the project follows:Cost of the remodel project: $350,000 Useful life of project in years: 6 Annual number of extra students: 5 Annual tuition per student: $22,000 Before- tax incremental cost of a student: $2,000 Company's income tax rate: 20% Required rate of return: 12% Assuming a six- year time horizon, what is the internal rate of return of the remodeling project? Calculate using both present value factors and separately using Excel's IRR function. Please include formulas to show how you arrive at each solution! A) Annual cash flow: Revenue ? Less costs:Other than depreciation ? Depreciation ? Income before taxes ? Income tax expense ?…

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