Question

In: Accounting

General Hospital's CDSC is contemplating purchasing a blood gases analysis machine at a cost of $960,000....

General Hospital's CDSC is contemplating purchasing a blood gases analysis machine at a cost of $960,000. Useful like is 10 years. The screening center currently serves 3,000 patients per year, 40% who need blood analysis data as part of their diagnosis tests. The blood samples are presently sent to a private laboratory that charges $200 per sample. In-house variable expenses are estimated to be $125 per sample if the CDSC purchases the analysis machine.

Use the Goal Seek function in Excel to determine the indifference point.

Solutions

Expert Solution

First put the values below as :

The formula for the Cell C8 is C3*C5-C7-C3*C5 which is my revenue.

Now put the cursor on cell C8 and press ALT +A+W+G in excel to go to goal seek option.

Press Ok as we want the indifferent point which is nothing but the revenue will equal to zero that is why the To value have been set as 0 by changing the value in Cell C5 .

We can find the result in cell C5 as 1280 patients to break even.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

The non-profit University Hospital is contemplating purchasing a new blood gas machine at a cost of...
The non-profit University Hospital is contemplating purchasing a new blood gas machine at a cost of $1,500,000. Useful life of this machine is 10 years. The hospital currently serves 5,000 patients per year, 40 percent of whom need blood gas analysis data as part of the diagnostic tests. The blood samples are presently sent to a private laboratory that charges $150 per sample. In-house variable expenses are estimated to be $85 per sample if the hospital purchases the analysis machine....
Pooh Industries is contemplating purchasing a new machine that will significantly improve the efficiency of their...
Pooh Industries is contemplating purchasing a new machine that will significantly improve the efficiency of their operations. To date the company has spent $15,000 evaluating the machine to better determine annual operating savings from using the machine. The new machine would cost $800,000 and would be depreciated over an expected life of 8 years to a $40,000 salvage value using the straight-line method. Pooh forecasts that the new machine would reduce operating expenses by $200,000 per year. The firm's marginal...
Pooh Industries is contemplating purchasing a new machine that will significantly improve the efficiency of their...
Pooh Industries is contemplating purchasing a new machine that will significantly improve the efficiency of their operations. To date the company has spent $15,000 evaluating the machine to better determine annual operating savings from using the machine. The new machine would cost $800,000 and would be depreciated over an expected life of 8 years to a $40,000 salvage value using the straight-line method. Pooh forecasts that the new machine would reduce operating expenses by $200,000 per year. The firm's marginal...
Barney Googal owns a garage and is contemplating purchasing a tire retreading machine for $19,820. After...
Barney Googal owns a garage and is contemplating purchasing a tire retreading machine for $19,820. After estimating costs and revenues, Barney projects a net cash inflow from the retreading machine of $3,600 annually for 8 years. Barney hopes to earn a return of 8% on such investments. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What is the present value of the retreading operation? (Round answer to...
Donald Googal owns a garage and is contemplating purchasing a tire retreading machine for $17,000. After...
Donald Googal owns a garage and is contemplating purchasing a tire retreading machine for $17,000. After estimating costs and revenues, Donald projects a net cash inflow from the retreading machine of $3,740 annually for 13 years. Donald hopes to earn a return of 15% on such investments. What is the present value of the retreading operation? Should Donald Googal purchase the retreading machine? (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (Round answer to...
Your company is contemplating the purchase of a large stamping machine. The machine will cost $161,000....
Your company is contemplating the purchase of a large stamping machine. The machine will cost $161,000. With additional transportation and installation costs of $5,000 and $12,000​, ​respectively, the cost basis for depreciation purposes is $178,000. Its MV at the end of five years is estimated as $39,000. The IRS has assured you that this machine will fall under a three year MACRS class life category. The justifications for this machine include $39,000 savings per year in labor and $26,000 savings...
123 Inc. is considering purchasing a new machine. The machine will cost $3,250,000. The machine will...
123 Inc. is considering purchasing a new machine. The machine will cost $3,250,000. The machine will be used for a project that lasts 3 years. The expected salvage of the machine at the end of the project is $800,000. The machine will be used to produce widgets. The marketing department has forecasted that the company will be able to sell 280,000 widgets per year. The marketing department believes that the company will be able to charge $22 per widget. The...
Norwest is planning on purchasing a welding machine. The expected cost of this machine is $60,000,...
Norwest is planning on purchasing a welding machine. The expected cost of this machine is $60,000, and it is expected to have a useful life of 7 years with an estimated salvage value of $4,000. The machine is expected to produce cash savings of $20,000 per year in reduced labor costs and the cash operating costs to run this machine are estimated to be $6,000 per year. Assuming Norwest is in the 34% tax bracket and has a minimum desired...
"A corporation is considering purchasing a vertical drill machine. The machine will cost $66,000 and will...
"A corporation is considering purchasing a vertical drill machine. The machine will cost $66,000 and will have a 2-year service life. The selling price of the machine at the end of 2 years is expected to be $43,000 in today's dollars. The machine will generate annual revenues of $62,000 (today's dollars), but the company expects to have annual expenses (excluding depreciation) of $12000 (today's dollars). The asset is classified as a 7-year MACRS property. The tax rate for the firm...
King’s Department Store is contemplating the purchase of a new machine at a cost of $35,370....
King’s Department Store is contemplating the purchase of a new machine at a cost of $35,370. The machine will provide $5,200 per year in cash flow for nine years. King’s has a cost of capital of 11 percent. Use Appendix D for an approximate answer but calculate your final answer using the financial calculator method. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT