Reference no: EM133273852

Suppose that the Happy-n-Healthy primary care practice is considering whether to pay for one of its nurse practitioners, Wendy, to obtain a special certification that will permit her to prescribe buprenorphine - an opiate addiction treatment medication. To gain this certification, Wendy will have to attend a training program that costs $5,000 in fees, and she will not be able to see any clinic patients for three days while she attends training. As a result of the training, Wendy could generate an additional $2,500 in practice revenue per year during each of the first two years after completing training.

a. If both the direct and indirect training costs are considered, will the up-front investment cost of Wendy's training be recovered within the first two years after training? Explain why or why not.

b. Suppose the practice applies a 10% discount rate when calculating the present value of future practice revenue. Provide a mathematical expression for calculating the present value of Wendy's added practice revenue over the first two years she is certified to prescribe buprenorphine. [NOTE: You do not need to calculate the present value answer. You only need to provide an expression for the calculation.]