A new cardiac catheterization lab was constructed at Have a Heart Hospital. The

Q: A new cardiac catheterization lab was constructed at Have a Heart Hospital. The

The profit for catheterization lab is as follows: Hence Profit was $177,000 The required return on investment is as follows: Hence reuquired return was $120,000 and profit was at $177,000. Hence profit meets the desired ROI Revenue Generated (7000*640) 4480000 Less:Fixed Cost 2000000 Less:Variable cost (7000*329) 2303000 Profit 177000

ID: 2709897 • Letter: A

Question

A new cardiac catheterization lab was constructed at Have a Heart Hospital. The investment for the lab was $950,000 in equipment costs and $50,000 in renovation costs. A desired return on investment is 12%. Once the lab was constructed, 7,000 patients were served in the first year and were charged $640 for each procedure. The annual fixed cost for the catheterization lab is $2,000,000 and the variable cost is $329 per procedure. What is the catheterization labs profit? Did this profit meet its desired ROI?

Explanation / Answer

The profit for catheterization lab is as follows:

Hence Profit was $177,000

The required return on investment is as follows:

Hence reuquired return was $120,000 and profit was at $177,000. Hence profit meets the desired ROI

Revenue Generated (7000*640) 4480000 Less:Fixed Cost 2000000 Less:Variable cost (7000*329) 2303000 Profit 177000

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A new cardiac catheterization lab was constructed at Havea Heart Hospital. The i

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