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A new cardiac catheterization lab was constructed at Havea Heart Hospital.  The investment for the lab was $450,000 in equipment costs and $50,000 in renovation costs.  A desired return on investment is 12%.  Once the lab was constructed, 5,000 patients were served in the first year and were charged $340 for each procedure.  The annual fixed cost for the catheterization lab is $1,000,000 and the variable cost is $129 per procedure.  a.  What is the lab's profit? b. Calculate the ROI for the catheterization lab. b.  Does the profit generated meet the hospital's the required ROI?  Enter Yes or No for your answer.

A new cardiac catheterization lab was constructed at Havea Heart Hospital.  The investment for the lab was $450,000 in equipment costs and $50,000 in renovation costs.  A desired return on investment is 12%.  Once the lab was constructed, 5,000 patients were served in the first year and were charged $340 for each procedure.  The annual fixed cost for the catheterization lab is $1,000,000 and the variable cost is $129 per procedure.  a.  What is the lab's profit? b. Calculate the ROI for the catheterization lab. b.  Does the profit generated meet the hospital's the required ROI?  Enter Yes or No for your answer.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 4P
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A new cardiac catheterization lab was constructed at Havea Heart Hospital.  The investment for the lab was $450,000 in equipment costs and $50,000 in renovation costs.  A desired return on investment is 12%.  Once the lab was constructed, 5,000 patients were served in the first year and were charged $340 for each procedure.  The annual fixed cost for the catheterization lab is $1,000,000 and the variable cost is $129 per procedure. 

a.  What is the lab's profit?

b. Calculate the ROI for the catheterization lab.

b.  Does the profit generated meet the hospital's the required ROI?  Enter Yes or No for your answer.

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