Calculate the annual net cash flow required from the scanner

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Memorial Hospital is considering the acquisition of a new diagnostic scanning machine. The investment required to get the machine operational will be $1,893,000. The machine will be capable of performing 8,400 scanning procedures per year, but based on the experience of other hospitals, management estimates that the machine will be used at 80% of its capacity. The hospital's cost of capital is 12%; the machine has an estimated useful life of eight years and no salvage value. Table 6-5 (Use appropriate factor(s) from the table provided. Round the PV factors to 4 decimals.)

Required:

a. Assuming a constant cash flow every year, calculate the annual net cash flow required from the scanner if the IRR of the investment is to equal 12%. (Hint: The annual net cash flow requirement is an annuity.)(Round your answer to the nearest whole dollar amount.)

Reference no: EM131798749

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