Question

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

1. Calculate the cath lab's profit.

2. Calculate the ROI for the cath lab.

3. Did this profit meet its desired ROI? Enter YES or NO for your answer.

Answer 1