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Question 2 Peter Boss graduated from medical school. He is considering opening his own family practice doctor's office. A doctor's office is a high fixed-cost business, as it requires considerable expenditures for facilities, labor and equipment, no matter how many families are served. Assume the annual fixed cost of operations is $400,000. Further assume that the only significant variable cost relates to patients served. An average patient-served costs $250. His banker has asked a variety of questions in relation to providing a loan for this business. Instructions: a. If the average patient is charged $475 for services, how many patients must be served to reach the break-event point? (4 points) b. If the banker believes Peter will serve 1000 patients during the first year in business, how much will be the business profit or loss during its first year of operation? (4 points) C. If Peter believes his profits will be at least $100,000 during the first year, how much is he anticipating for total revenue? (4 points) d. The banker has suggested that Peter can reduce his fixed costs by $150,000 if he does not purchase certain equipment. Peter can instead lease or rent this equipment as needed. The variable cost of leasing this equipment is $55 per patient served. Will this suggestion help Peter reach the break-even point sooner? (4 points) e. Explain briefly why the CVP analysis is important in a start-up business project. (4 points)