Hospital intends to purchase adjoining property

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Reference no: EM13126191

Predict the cash flows for the hospital over the next five years beginning with the current year (Year 0). The hospital projects revenues to be $3,100,000 in 2012, $3,200,000 in 2013, 3,250,000 in 2014 and 3,300,000 in 2015. Projections of expenses include an increase in operating expenses of $25,000 annually from 2012-2015 as the hospital intends to reduce operating expenses through lower employee costs due to a recent hiring freeze and the hospital’s intention of outsourcing some functions to private firms. The cost of capital will remain at 15% and the hospital intends to purchase adjoining property in 2012 as the location for the proposed cancer center. Depreciation expense will increase by $5,000 in each of the next five years.

Reference no: EM13126191

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