After the closing of the deal to buy the two PT businesses, Aaron Brown thought about how to   improve their performance

After the closing of the deal to buy the two PT businesses, Aaron Brown thought about how to

improve their performance. One promising project was to invest in PET (Positron Emission Tomography) scanners.

Aaron believed that three scanners would serve customers' needs: one each in Ohio, Maryland, and Delaware.

Consulting with industry marketers, Aaron expected a minimum of 50 scans per week during the first year of

operating the PET scanners, and at least 100 per week in the four years thereafter.

1-Each scan would be billed at $1,800.

2-Capital investment was estimated to be $4 million for each PET scanner, including installation in existing space.

3-Annual operating expenses per scanner were estimated to be $1.5 million.

4-Useful life of the PET scanners is 5 years, with zero residual value.

5-Inflation is 0%.

Q5a

In the box below, set up the capital budgeting analysis, using what you learned in W7 & W8.

Limit yourself to 25 rows.

Q5b

Discuss whether or not Aaron Brown should greenlight the proposed PET scanner project,

Q5c

If the inflation rate is non-zero, explain how you would include the inflation estimate in your analysis.