Having trouble with these two questions of my healthcare finance class...

2. Inflation is one of the most difficult factors to deal with in project analysis.

a. Complete the inflation impact table shown in Exhibit 20.2.

b. What management information is provided by the inflation impact table?

3. One board member wants to make sure that a complete risk analysis, including sensitivity and scenario

analyses, is performed before the proposal is sent to the board.

a. Perform a sensitivity analysis.

b. What management information is provided by the sensitivity analysis?

KEY OUTPUT INPUT DATA: NPV $150,000 Land initial cost $3,991,788 $25,000 Land opportunity cost (and salvage value) RR 13.2% Building/equipment cost $10,000,000 MIRR 9.1% $5,000,000 Build equipment salvage value Payback 4.1 Procedures per day 20 $1,000 Average net patient revenue per procedure $918,000 Labor costs Utilities costs $50,000 $51,000 Incremental overhead Supply cost ($procedure) $200 3.0% Inflation rate on net patient revenue 3.0% Inflation rate on costs 40.0% Tax rate Revenues lost from inpatient surgeries $1,000,000 $500,000 Reduction in inpatient surgery costs Cost of capital 2.0% MODEL GENERATED DATA: Depreciation Schedule: MACRS Deprec. End of Year Year Expense Book value acto 0.20 $2,000,000 0.32 3,200,000 0.19 1,900,000 0.1 1,200,000 $8,000,000 4,800,000 2,900,000 1,700,000 0.11 1,100,000 600.000 600,000 0.06