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?