Allegheny Community Hospital is a nonprofit hospital operated by the county. The hospital's administrator is considering a proposal to open a new outpatient clinic in the nearby city of New Castle. The administrator has made the following estimates pertinent to the proposal. 1. Construction of the clinic building will cost $660,000 in two equal installments of $330,000, to be paid at the end of 20x0 and 20x1. The clinic will open on January 2, 20x2. All staffing and operating costs begin in 20x2. 2. Equipment for the clinic will cost $60,000, to be paid in December of 20x1. 3. Staffing of the clinic will cost $540,000 per year. 4. Other operating costs at the clinic will be $66,000 per year. 5. Opening the clinic is expected to increase charitable contributions to the hospital by $120,000 per year. 6. The clinic is expected to reduce costs at Allegheny Community Hospital. Annual cost savings at the hospital are projected to be $740,000. 7. A major refurbishment of the clinic is expected to be necessary toward the end of 20x5. This work will cost $90,000. 8. Due to shifting medical needs in the county, the administrator doubts the clinic will be needed after 209. 9. The clinic building and equipment could be sold for $120,000 at the end of 20x9. 10. The hospital's hurdle rate is 12 percent. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1-3. Fill in the following table to compute the net present value of the proposed outpatient clinic. 4. Should the administrator recommend to the hospital's trustees that the clinic be built? Future Value and Present Value Tables Table I Future Value of $1.00(1+r)^ Period 4% 6% 8% 10% 12% 14% 20% 1 1.040 1.060 1.080 1.100 1.120 1.140 1.200 2 1.082 1.124 1.166 1.210 1.254 1.300 1.440 3 1.125 1.191 1.260 1.331 1.405 1.482 1.728 4 1.170 1.263 1.361 1.464 1.574 1.689 2.074 5 1.217 1.338 1.469 1.611 1.762 1.925 2.488 6 1.265 1.419 1.587 1.772 1.974 2.195 2.986 7 1.316 1.504 1.714 1.949 2.211 2.502 3.583 8 1.369 1.594 1.851 2.144 2.476 2.853 4.300 9 1.423 1.690 1.999 2.359 2.773 3.252 5.160 10 1.480 1.791 2.159 2.594 3.106 3.707 6.192 11 1.540 1.898 2.332 2.853 3.479 4.226 7.430 12 1.601 2.012 2.518 3.139 3.896 4.818 8.916 13 1.665 2.133 2.720 3.452 4.364 5.492 10.699 14 1.732 2.261 2.937 3.798 4.887 6.261 12.839 15 1.801 2.397 3.172 4.177 5.474 7.138 15.407 20 2.191 3.207 4.661 6.728 9.646 13.743 38.338 30 3.243 5.744 10.063 17.450 29.960 50.950 237.380 40 4.801 10.286 21.725 45.260 93.051 188.880 1.469.800 Table II Future Value of a Series of $1.00 Cash Flows (Ordinary Annuity) (1 + r)" - 1 r Period 4% 6% 8% 10% 12% 14% 20% 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 2 2.040 2.060 2.080 2.100 2.120 2.140 2.220 3 3.122 3.184 3.246 3.310 3.374 3.440 3.640 4 4.247 4.375 4.506 4.641 4.779 4.921 5.368 5 5.416 5.637 5.867 6.105 6.353 6.610 7.442 6 6.633 6.975 7.336 7.716 8.115 8.536 9.930 7 7.898 8.394 8.923 9.487 10.089 10.730 12.916 8 9.214 9.898 10.637 11.436 12.300 13.233 16.499 9 10.583 11.491 12.488 13.580 14.776 16.085 20.799 10 12.006 13.181 14.487 15.938 17.549 19.337 25.959 11 13.486 14.972 16.646 18.531 20.655 23.045 32.150 22 12 15.026 16.870 18.977 21.385 24.133 27.271 39.580 13 16.627 18.882 21.495 24.523 28.029 32.089 48.497 14 18.292 21.015 24.215 27.976 32.393 37.581 59.196 15 20.024 23.276 27.152 31.773 37.280 43.842 72.035 20 29.778 36.778 45.762 75.052 30 56.085 40 95.026 79.058 154.762 57.276 91.025 113.283 164.496 241.330 356.790 1,181.900 259.057 442.597 767.090 1,342.000 7,343.900 186.690 Table III 1 Present Value of $1.00 (1 + r)" Period 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 12 34 .962 .943 .926 .909 .893 .877 .862 .847 .833 .820 .806 .794 .781 .769 .758 .925 .890 .857 .826 .797 .769 .743 .718 .694 .672 .650 .630 .610 .592 .574 .889 .840 .794 .751 .712 .675 .641 .609 .579 .551 .524 .500 .477 .455 .435 .855 .792 .735 .683 .636 .592 .552 .516 .482 .451 .423 .397 .373 .350 .329 5 .822 .747 .681 .621 .567 .519 .476 .437 .402 .370 .341 .315 .291 .269 .250 6789 .790 .705 .760 .665 .583 .630 .564 .507 .456 .410 .370 .335 .303 .275 .250 .227 .207 .189 .513 .452 .400 .354 .314 .279 .249 .222 .198 .178 .159 .143 .731 .627 .540 .467 .703 .592 .500 .424 .361 .308 .404 .351 .305 .266 .233 .204 .179 .157 .139 .123 .108 .263 .225 .194 .167 .144 .125 .108 .094 .082 10 .676 .558 .463 .386 .322 .270 .227 .191 .162 .137 .116 .099 .085 .073 .062 11 .650 .527 .429 .350 .287 .237 12 .625 .497 .397 .319 .257 13 .601 .469 .368 .290 .229 .182 .145 14 .577 .442 .340 .263 .205 .160 .125 .195 .208 .168 .137 .112 .116 .093 .099 .078 .162 .135 .112 .094 .092 .076 .075 .061 .062 .049 .079 .066 .056 .062 .052 .043 .036 .050 .040 .033 .027 .047 .039 .032 .025 .021 15 .555 .417 .315 .239 .183 .140 .108 .084 .065 .051 .040 .031 .025 .020 .016 20 40 234 .456 .312 .215 .149 .104 .073 .051 .037 30 .308 .174 .099 .057 .033 .020 .012 .007 .026 .004 .019 .014 .010 .003 .002 .001 .001 .007 .005 .004 .208 .097 .046 .022 .011 .005 .003 .001 .001 Table IV Present Value of Series of $1.00 Cash Flows 1 1 (1+) Period 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 25% 26% 28% 30% 1 0.962 0.943 0.926 2 1.886 1.833 3 2.775 2.673 1.783 2.577 4 3.630 3.465 3.312 3.170 3.037 ST 5 4.452 4.212 3.993 3.791 3.605 0.909 0.893 0.877 0.862 0.847 0.833 0.820 1.736 1.690 1.647 1.605 1.566 1.528 1.492 2.487 2.402 2.322 2.246 2.174 2.106 2,042 2.914 2.798 2.690 2.589 2.494 3.433 3.274 3.127 2.991 2.864 0.806 0.800 0.794 0.781 0.769 1.457 1.440 1.424 1.392 1.361 1.981 1.952 1.923 1.868 1.816 2.404 2.362 2.320 2.241 2.166 2.745 2.689 2.635 2.532 2.436 9 5.242 4.917 7 6.002 5.582 8 6.733 6.210 5.206 5.747 9 7.435 6.802 6.247 5.759 10 8.111 7.360 6.710 6.145 4.623 4.355 4.111 4.868 4.564 5.335 4.968 5.328 5.650 3.889 3.685 3.498 3.326 3.167 3.020 2.951 2.885 2.759 2.643 4.288 4.039 3.812 3.605 3.416 3.242 3.161 3.083 2.937 2.802 4.639 4.344 4.078 3.837 3.619 3.421 3.329 3.241 3.076 2.925 4.946 4.607 4.303 4.031 3.786 3.566 3.463 3.366 3.184 3.019 5.216 4.833 4.494 4.192 3.923 3.682 3.571 3.465 3.269 3.092 11 8.760 7.887 7.139 6.495 5.938 12 9.385 8.384 7.536 6.814 6.194 13 9.986 8.853 7.904 7.103 6.424 14 10.563 9.295 8.244 7.367 6.628 6.002 15 11.118 9.712 8.559 7.606 6.811 6.142 5.660 5.197 4.793 4.439 4.127 3.851 5.842 5.342 4.910 4.533 4.203 3.912 5.468 5.008 4.611 4.265 3.962 5.575 4.001 5.092 4.675 4.315 5.453 5.029 4.656 4.327 4.035 3.776 3.656 3.544 3.335 3.147 3.725 3.606 3.387 3.190 3.780 3.656 3.427 3.223 3.824 3.695 3.459 3.249 3.859 3.726 3.483 3.268 20 13.590 11.470 9.818 8.514 7.469 6.623 5.929 30 17.292 13.765 11.258 9.427 8.055 7.003 6.177 40 19.793 15.046 11.925 9.779 8.244 7.105 6.234 5.353 4.870 4.460 5.517 4.979 4.534 5.548 4.997 4.544 4.110 3.954 3.808 3.546 3.316 4.160 3.995 3.842 3.569 3.332 4.166 3.999 3.846 3.571 3.333 Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 Fill in the following table to compute the net present value of the proposed outpatient clinic. (Negative amounts should be indicated by a minus sign. Round your "Discount factors Type of Cash Flow 20x0 20x1 20x2 20x3 20x4 20x5 20x6 20x7 20x8 1. Construction of clinic 2. Equipment purchase 3. Staffing 4. Other operating costs 5. Increased charitable contributions 6. Cost savings at hospital 7. Cost of refurbishment 9. Salvage value Incremental cash flow Discount factor Present value Net present value < Req 1 to 3 Req 4 > " to 3 decimal places.) 20x9