Need help with this discussion... Just the calculations.

Discussion Scenario In this discussion, you will assume the role of Business Operations Manager at Ashley Regional Medical Center, which is evaluating the potential adoption of Isansys Wireless Monitoring systems in their newborn intensive care unit (Birmingham Children's Hospital, n.d.). North Dakota's Ashley Regional believes that this technology will be both attractive to customers, and in line with their \"Higher Standards of Care Every Day\" marketing and branding campaign (Ashley Regional Medical Center, n.d.). Importantly, a variety of estimates are dependent on forecasting values. As Business Operations Manager at Ashley Regional Medical Center, you thus believe that a thorough assessment of risk must be made prior to the adoption of this costly system, which is a continuous monitoring and digitization platform based on a \"smart-patch\" cardiac sensor and other wireless sensors, and a multifunction patient portal located near each patient. As patient outcomes are improved, Ashley Regional believes that cost may fall dramatically over time (Hoagland, 2011), for this small business. This assumption depends on both cost and revenue assumptions, however, which you understand may be somewhat optimistic given the presence of a newly-built competitor not to many miles away. In investigating adoption of this technology as Business Operations Manager at Ashley Regional Medical Center, you have estimated the project's NPV to be positive at a discount rate of 18%, based on projected cash flows. However, you recognize the possibility of error in these cash flow projections, and you wish to alert decision-makers as to the impact of different assumptions about the future, on these estimates. You intend to present these findings to the Medical Center's Technology Adoption Board, a group of medical professionals that is most likely unfamiliar with this variety of analysis. As such, while you intend to include a discussion of sensitivity and scenario analyses alongside your estimates, you understand that you will have to put some attention into introducing sensitivity and scenario analysis prior to delivering this judgment. Working capital needs will begin at $20,000, and will be 10% of revenues thereafter, while an initial investment of $800,000 (the price of the Isansys unit) will be required. You have developed the following base estimate of essential data, and will assume that the Isansys system will be depreciated on a MACRS 7-year basis: Base Case Unit Sales $7,200 Price per Unit 1,800 Variable costs per unit 1,200 Fixed costs per year $400,000 Table 1. Base Case In the base case given, using a discount rate of 28%, a discounted cash flow would appear as follows: Year 0 Year 1 Year 2 Year 3 Sales - $12,960,000 $16,848,000 $9,072,000 Variable - 8,640,000 11,232,000 6,048,000 Fixed - 400,000 400,000 400,000 Depreciation - $114,320 $195,920 $489,760 EBIT - 3,805,680.000 5,020,080.000 2,134,240.000 Taxes (34%) - 1,293,931.200 1,706,827.200 725,641.600 Net Income - 2,511,748.800 3,313,252.800 1,408,598.400 1.28 - 1.28 1.64 2.10 NPV - 1,962,304 2,022,249 671,672 Table 2. Calculation of NPV of EBIT, for use in computing Operating Cash Flow, Base Case I. Operating Cash Flow Operating Cash Flow Year 0 Year 1 Year 2 Year 3 EBIT - $3,805,680.00 $5,020,080.00 $2,134,240.00 Deprec - 57,160 57,161 57,162 Taxes - 1,293,931 1,706,827 725,642 Operating Cash Flow - 2,568,909 3,370,414 1,465,760 1.28 - 1.28 1.64 2.10 Base Case NPV - $2,006,960.00 $2,057,137.33 $698,929.02 (20,000) - - - - 1,296,000 1,684,800 907,200 II. Working Capital Initial NWC Change in NWC NWC Recovery Total Change in NWC - - - 757,600 (20,000) (1,276,000) (388,800) 777,600 (800,000) - - - - - - 349,840 (800,000) - - 349,840 III. Capital Spending Initial Outlay Aftertax Salvage Total Capital Spending Table 3. Components of Operating Cash Flow, Base Case Year 0 Operating Cash Flow Year 1 Year 2 Year 3 - 2,006,960 2,057,137 698,929 Changes in NWC (20,000) (1,276,000) (388,800) 777,600 Capital Spending (800,000) 0 0 349,840 Total Project Cash Flow (820,000) 730,960 1,668,337 1,826,369 Cumulative Cash Flow (820,000) (89,040) 1,579,297 3,405,666 1.00 1.28 1.64 2.10 (820,000) (69,562) 963,926 1,623,948 1.28% Discounted Cash Flow Table 4. Discounted Cash Flow, Base Case