Construct a five-year cash flow analysis for project

Assignment Help Financial Accounting

Reference no: EM133492650

Case: A hospital has an unimproved lot a few miles from the hospital itself on which it is considering building a health clinic. Two years ago the board had a feasibility study done for $250,000 that indicated it was likely a profitable venture but the board never acted on it. The plan was recently resurrected with updated numbers and the board is considering the investment again.

The land would get $750,000 if sold in today's market. Constructing and equipping the clinic will be $7,500,000. Management believes the center will generate 35,000 visits per year. In Year 1, revenue is expected to be $140 per visit, supply cost will be $32.50 per visit, labor cost (which will not vary with volume) will be $1,500,000, and maintenance (which also will not vary with volume) is $175,000.. Inflation is projected at 2.75% per year after that. The hospital's corporate cost of capital is 6.75%.

Construct a five-year cash flow analysis for this project (i.e. Years 0 to Year 5). Line items should include initial cash outflows(ie initial investment), revenue, supply cost, labor cost, maintenance cost and net cash flow. What is the NPV for this project?

What is the volume of visits that will generate a breakeven NPV for the project.

Reference no: EM133492650

Questions Cloud

What should is the weakness introduction : What is the strong in the essay What should is the weakness Introduction The article, "5 Subtle Signs You're in a Toxic Romantic Relationship

How can your firm turn this npv into cash? today : What is the NPV of this? opportunity and How can your firm turn this NPV into cash? today - The government will pay you $20.2 million in one year upon

Explain your rationale for selecting evaluation study design : PUBH 6475- Explain your rationale for selecting this evaluation study design. Describe who would be in the comparison or control group if applicable.

Evaluate potential benefits increased use of ai technologies : Evaluate the potential benefits that increased use of AI technologies could bring to Harvey Norman Holdings.

Construct a five-year cash flow analysis for project : Construct a five-year cash flow analysis for this project (i.e. Years 0 to Year 5). Line items should include initial cash outflows(ie initial investment)

Compose a six-page opinion paper : compose a six-page opinion paper on the points raised, and how the responsibilities for (CFOs) of regular corporations may be judged in a similar manner to bank

How the implemented controls reduce the risk : How the implemented controls reduce the risk for the organization. You may want to consider summarizing at the business process level

What role does values-attitudes-diversity play at gusto 54 : What role does values, attitudes, and diversity play at Gusto 54? Do you consider the values, attitudes, and diversity to be a strength or weakness at Gusto 54?

Prepare the journal entry to record the cash sale : Prepare the journal entry to record the cash sale of the computer, cost of goods sold, and liabilities related to the warranties

User Account

All Pages