Bakers healthcare finance Basic tools for non-financial manager sixth edition chapter 19 problem 1:

A hospital is planning to build a nonprofit urgent care center next to its emergency department to siphon off non-emergent cases. The emergency department frequently operates beyond its designed capacity, creating patient and employee dissatisfaction. It is expected that the emergency department will not lose any patients if the center is built due to patients leaving before treatment is rendered and a growing demand for emergency department services. The center is expected to require a $4 million outlay in year zero. No depreciation expense is needed since the center is nonprofit and reaps no tax benefit. The following table provides the best case, most likely, and worst case estimates for patient quantity, reimbursement, supply and other expenses per encounter, and growth rates for patient quantity, reimbursement, and expenses beginning in year one. The emergency department and finance departments have estimated that the center will need five positions earning an average of $240,000 in salaries and benefits, 12 nurses at $84,000 each, and nine other staff at $48,000 each. Create a five year capital budget analysis and calculate the net present value and internal rate of return. In addition, calculate the NPVs and IRRs at best and worst case volume with all other variables at their most likely estimates.

drecurn problems that the ED will not lose any patients if quanity reimbatrement, sod cosesto year 0 No depreciation expense is needed benefits, twelve nimer it set o00 cat shoe the center is nonprofit and teaps no. ax beacifit Crate a five year capial buder modin 286 Chapter 19 Constructing a Capital Budget and internal rate of return (IRR). In addition, calculate the NPVs and IRRs at best-and worst-case volume with all other variables at their most likely estimates. drecurn problems that the ED will not lose any patients if quanity reimbatrement, sod cosesto year 0 No depreciation expense is needed benefits, twelve nimer it set o00 cat shoe the center is nonprofit and teaps no. ax beacifit Crate a five year capial buder modin 286 Chapter 19 Constructing a Capital Budget and internal rate of return (IRR). In addition, calculate the NPVs and IRRs at best-and worst-case volume with all other variables at their most likely estimates