Land initial cost$150,000 Land opportunity cost (and salvage value)

$200,000 Building/equipment cost

$10,000,000 Build/equipment salvage value

$5,000,000 Procedures per day

20 Average net patient revenue per procedure

$1,000 Labor costs$918,000 Utilities costs$50,000 Incremental overhead

$36,000 Supply cost ($/procedure)

$200 Inflation rate on net patient revenue

3.0%Inflation rate on costs

3.0%Tax rate40.0%Revenues lost from inpatient surgeries

$1,000,000Reduction in inpatient surgery costs

$500,000Cost of capital10.0%No of days operation

250

5. A board member is interested in the utilization breakeven of the Center.

5.a. What are the breakeven values of the three input variables that are highly uncertain?

5.b. What management information is provided by the breakeven analysis?