Dr Magneto Is Evaluating Whether to Open a Private MRI

question 82

Multiple Choice

Dr. Magneto is evaluating whether to open a private MRI clinic in leased office space in a local strip mall. The clinic will run for two years and then close. Before the clinic opens, the offices require $200,000 of renovations. Dr. Magneto will buy $20,000 of computer equipment and one MRI machine. The MRI machine (GE 3.0T Signa Excite HD) costs $2.4M. Assume that the renovations, computer equipment and MRI are paid for at the beginning of the first year (t=0) and that all three are classified as 15-year property. Assume that the MRI machine will be sold for $500,000 at the end of the second year of business. The computer equipment will be worthless at that time.
The clinic can perform 72 scans per week for 49 operational weeks per year. The clinic will charge $600 per scan.
The clinic will need two technicians, two receptionists and one office manager. Wages, salaries and other payroll costs (i.e., health insurance premiums) will total $275,000 per year. Maintenance, supplies, marketing and operating costs for the machine are expected to be $200,000 per year. Annual rent is $60,000 payable at the end of each year. Assume that all revenues (and expenses) occur at the end of the year. The tax rate is 40% and Dr. Magneto's cost of capital is 10%. What is the initial cash flow for the project?
MACRS Depreciation Rates
$$\begin{array} { | c | c | c | } \hline \text { Year } & \mathbf { 1 0 - Y e a r } & \mathbf { 1 5 } - \text { Year } \\\hline 1 & 10.00 \% & 5.00 \% \\\hline 2 & 18.00 \% & 9.50 \% \\\hline 3 & 14.40 \% & 8.55 \% \\\hline\end{array}$$

• A)-$2,400,000
• B)-$2,420,000
• C)-$2,620,000
• D)-$2,655,000
• E)-$2,835,000

Identify key skills and attributes desired in management with an emphasis on communication.

Comprehend the steps of the basic communication process and the significance of feedback.

Analyze the appropriateness of different communication media based on the Lengel-Daft Contingency Model of Media Selection.

Understand the concept of noise in communication and its various forms.

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Definitions:

Social Support

Refers to the psychological and material resources provided by a network of family, friends, colleagues, and others, which can enhance an individual's ability to cope with stress and hardships.

Cognitive Development Theory

A theory that outlines how human beings perceive, think, and understand their world through the interplay of genetic and learned factors.

Cultural Context

The various social, religious, economic, and cultural conditions that influence the life of an individual or community.

Rational Behavior

Decision-making or action taken based on logical, reasoned considerations, often aiming for the most optimal outcome.