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You just got hired at a brand new hospital as a financialanalyst and the Board wants to buy an MRI machine but they areunsure if this makes financial sense. You gather some figures soyou can make an informed decision to present to the Board.(questions 40-44) Use CF’s given, no further calculation has to bedone for CF’s.Cost of the MRI machine 1.5 millionSalvage value after 5 years 50kWorking capital to hire an operator 200k only initially and notrecoverable.CF yr 1-3 400kCF yr 4-5 300kThe hospital currently has no commonstock or preferred stock or debt in their capital structure as itwas funded with a 25 million dollar gift from Bill Gates. Themachine is to be financed with a 5%, 5 year loan. Interest is taxdeductible and the tax rate is 30%Assume now that the hospital wasfinanced with 60% debt and 40% equity. The cost of debt is 6% andtaxes are 20%, while the risk free rate is 3%, beta is .8 and thereturn of the market is 9%. If cash flow in years 1-3 are nowassumed to increase to 500k instead of 400k, what would yourecommend to the board?a. Yes as it adds 136k in valueb. Yes as it adds 98k in valuec. no as the IRRd. Yes as it adds 100k in value44. T/F the payback under the originalMRI assumptions is 4.67 yearsMRI Cost1,500,000.00CF012345IRR9.14%SalvageValue50,000.00-1,700,000.00500,000.00500,000.00500,000.00300,000.00350,000.00WorkingCapital200,000.00CF Yr1-3500,000.00CF Yr4-5300,000.00