PART 1: Dr. Jones is interested in expanding his practice by adding a piece of radiology

PART 1: Dr. Jones is interested in expanding his practice by adding a piece of radiology

PART 1:

Dr. Jones is interested in expanding his practice by adding a piece of radiology equipment. The basic cost of the equipment would be $79,000 for the first year. The monthly loan cost for this equipment is $1,564.29 for five years. Additionally Dr. Jones will have to factor in the cost to hire a radiology tech with a predicted $39,600 annual salary (this includes all taxes and fringe benefits). The office already has a radiology room so there is no fixed costs associated with this purchase.

You help Dr. Jones determine that the office will do 1100 studies per year with an average reimbursement of $51.63. The variable cost per study is $3.24.

Using the standard pro forma sheet, is this a good purchase?

Why?

Solution Preview

Question part 1
Cost =$79,000
Loan =$1,564.29×5=$7820
radiology tech=$39,600×5=198000
Presently to do this investigations we will focus on the initial five years
Add up to cost = (79000+7820+198000) = $284820

(99 words)