Case 6 New Mri Machine

New MRI Machine: Financial Analysis Bayside Memorial Hospital is considering purchasing a new MRI machine. In order for the hospital to purchase this piece of equipment they will need to analyize the financial aspects involved. Questions such as “Will the new machine increase revenue?”, “Does the hospital have enough money for the initial cost of the new machine?”, and “Will the revenue from the machine offset the costs associated with using it?” need to be answered in order for the hospital to justify the purchase of the new MRI machine. There are numerous ways in which these answers are analysed and obtained. In order to acheive the final financial plan for the new MRI machince there are multiple financial aspects that the project manager must analyse and review. Some of these analysis would be the incremental cash flow, the sunk costs, the oppotunity costs, the strategic value and the inflation effects. First the
A simple budget is a budget that is composed of the financial estimations of what the new MRI machine will cost, what its projected cost of operations is and the revenue that it will produce. The simple budget would have the fixed amount of cash that the hospital currently has on hand. For instance, a simple budget would list the projected incremental cash flow, the sunk costs, the oppotunity costs, the strategic value and the inflation effects. A flexible budget is a budget that utilizes the simple budget figures and adds to or takes away from the previous financial numbers. For instance, the flexible budget would be utilized after the new MRI machine is purchased and in use in order to show the actual cost and revenue. This type of budget is also used to project expenses and revenues with given scenarios of events. The budget for the new MRI machine is an essential element to the proposed and final financial and strategic