Marleboro Memorial Hospital is expecting its new cancer center to generate the following cash flows:
|
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|
Years |
0 |
1 |
2 |
3 |
4 |
5 |
|
Initial investment |
($20,000,000) |
|
|
|
|
|
|
|
Net operatios cash flows |
|
($4,000,000) |
($6,000,000) |
($10,000,000) |
($12,000,000) |
($25,000,000) |
a. Determine the payback for the new cancer center.
b. Determine the net present value using a cost of capital of 12 percent.
c. Determine the net present value at a cost of capital of 16 percent, and compute the internal rate of return.
d. At a 12 percent cost of capital, should the project be accepted? At a16 percent cost of capital, should the project be accepted? Explain.
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