A new cardiac catheterization lab was constructed at Havea Heart

Hospital. The investment for the lab was $450,000 in equipment costs and

$50,000 in renovation costs. A desired return on investment is 12 percent. Once

the lab was constructed, 5,000 patients were served in the first year and were

charged $340, for each procedure. The annual fixed cost for the catheterization

lab is $1 million and the variable cost is $129 per procedure. What is the

catheterization labs profit? Did this profit meet its desired ROI? Why or Why

not?

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