The RADIOLOGY DEPARTMENT Of St. St joseph’s hospital , a not for profit is considering purchasing a magnetic resonance (MRI) machine. The cost of the machine to purchase and install is approximately $2,000,000. Assume St Josephs would like a minimum 8 percent return and the economic life of the machine is expected to have a life of 10 years. The machine has no salvage value.
If the MRI is installed, the cash flows are expected to increase by $300,000 per year.
Required
A. Find the NPV of the MRI
B. Should the hospital acquire the MRI
C. What nonfinancial considerations might be important to the MRI DECISION?