Perform a Sensitivity Analysis and a Scenario Analysis using the data. From this data, analyze the feasibility of the proposed renovation. Make a recommendation to Robertson based on your analysis. Support your analysis using Excel to address the financial calculations specifically requested by Robertson to assist her in her decision.

In May 2008, Wendy Robertson, the business manager at the Western Day Care Centre (WDCC), was considering expanding the company's services at its Emery Street location. WDCC had two locations in London, Ontario, both of which provided education and care to children between the ages of three months and five years. WDCC divided its facilities into rooms for three age categories infants, toddlers and preschoolers - each with its own set of care requirements and regulations under Ontario's Day Nurseries Act. WDCC fees varied according to enrolment types and age category (see Exhibit 1). WDCC was running at full capacity and had a continuously growing waiting list (see Exhibit 2). Demand for day care services was increasing. PROPOSED EMERY STREET RENOVATION Robertson was considering the feasibility of a renovation to convert the first-floor gymnasium into a classroom (see Exhibit 3). To turn the gymnasium into an operating classroom, the Day Nurseries Act required that the nursery room must have a total window area of at least 10 per cent of the floor area. Robertson estimated that the renovation would require a minimum investment of $10,000 to construct the necessary windows and $2,500 for start-up programming. The newly renovated room would provide WDCC with one additional classroom for one age category. REVENUE AND COSTS Although Robertson could not predict the type of enrolment, she believed that the new classroom would have a full class of children at any given point. She thought that revenue could be most conservatively estimated using the full-time weekly enrolment fees. Revenue figures are based on 49 weeks of full-time enrolment." Annual costs for the day care facility included salaries, staff benefits of 16.5 per cent and food estimates (see Exhibit 4). Parents were allowed to take two weeks of vacation, and WDCC was closed for one week during the December holidays. ONTARIO DAY NURSERIES ACT Premise Regulations According to the Day Nurseries Act, every day nursery needed to have 30 square feet of unobstructed indoor play activity room or classroom space for each child. Play activity rooms and separate sleeping areas were required for every 10 infants." For toddlers and preschoolers, a separate play activity room was required for every 15 children and 24 children respectively. Playground Regulations For full day nurseries, including WDCC, a fenced outdoor space of 60 square feet per child was required. WDCC had enough fenced outdoor playground space to support any additional enrolment resulting from the renovation of a single room. Staffing Requirements The ratio of staff to children was also regulated by the Day Nurseries Act. WDCC's classroom size was the same as the maximum allowed by the Day Nurseries Act (Exhibit 5). DECISION Before Robertson finalized her plans for the renovation, she was curious about the feasibility of the option. In particular, she wanted to know the total cost, the amount of new revenue that would be generated and the payback period. Exhibit 1 FEE STRUCTURE AT WESTERN DAY CARE Description Registration Waiting List Full Fees per week (for full-time enrolment) Part-time Fees per day (for full-time enrolment) Fee $20.00 $10.00 | $217.50 per child in the Infant program $212.50 per child in the Toddler program $167.50 per child in the Preschooler program $47.00 per child in the Infant program $46.00 per child in the Toddler program $37.00 per child in the Preschooler program $36.00 per child in the Infant program $34.00 per child in the Toddler program $28.00 per child in the Preschooler program $28.00 per child in the Infant program $27.00 per child in the Toddler program $22.00 per child in the Preschooler program $5.00 per family Part-time Fees per half day (lunch included) Part-time Fees per half day (lunch excluded) Parent Association Fee per week Source: Company files. Exhibit 2 ENROLMENT AND WAITING LIST FIGURES Enrolment figures Infants Toddlers Preschoolers 10 20 Waiting List figures (estimates) Infants and Toddlers Preschoolers Exhibit 3 BLUEPRINT LE ... ... VO 2FEEL MIS Gymnasium 35 by 22 feet Source: Company files Exhibit 4 ANNUAL COSTS Salaries (per staff) Food (per child) Source: Company files. $28743.00 per year $370.29 per year Exhibit 5 STAFFING RATIO AND GROUP SIZE Max. # of children in a group 10 Age Category Infants Toddlers Preschoolers Source: Company file. Ratio of staff to children 3 to 10 infants | 1 to 5 toddlers 1 to 8 preschoolers 15 24 Average, does not include benefits * Three months of age and over, up to and including 18 months of age. * 18 months of age and over, up to and including 30 months of age. 30 months of age and over, up to and including 5 years of age; WDCC's preschooler class size was 16, rather than the 24 allowed under the Day Nurseries Act