The financial benefits for the project are based on three assumptions:

$-$ the simulation will enable an additional $100$ procedures annually

$-2\%$ of these procedures will result in follow$-$up surgeries at the health system

$-$ the profit from each surgery will be $$1,000$

You want to know which of these assumptions is most important to the success of the project so you interview several people with knowledge of the simulation and collect the following information.

$-$ Other health systems that have implemented the same simulation found increases in the number of colonoscopies done ranging from $10$ additional procedures to $150.$ The most common increases you found in your research were $10,50,100$ and $150.$

$-$ Estimates of the $\%$ of colonoscopies requiring future surgery range from $0\mathrm{.}25\%$ to $2\%$

$-$ There are four types of surgery possible to remove polyps. The type chosen depends on the patient$$s clinical condition. Profits from each type of surgery are estimated to be $$250,$ $$500,$ $$1000,$ $$1250.$

Questions $2-8$ will ask you to conduct a sensitivity analysis that looks at how NPV varies as you change each of these assumptions based on the additional information you've collected. You'll then use this analysis to determine which assumption you think is most important to the financial success of the proposed simulation.

$2.$ I$$m providing you with an Excel file that models the financial effects of the colonoscopy simulation. Use this file to do sensitivity analysis of the three key assumptions you've identified $($the number of additional annual procedures, the percent of procedures resulting in follow$-$up surgeries and the profit from each surgery$).$

The inputs to your sensitivity analysis will be the values of the assumptions identified above. For instance, $0\mathrm{.}25\%$ and $2\%$ for the assumption about the percent of colonoscopies requiring future surgery.

Add tables with your sensitivity analysis to the excel file I provide, save your changes and upload the file.

You can use this analysis to answer questions $3-8.$

$3.$ What will the NPV for the simulation program be if the program only results in $10$ additional procedures $($instead of the base$-$case estimate of $100)?$

$4.$ What will the NPV for the simulation program be if the program results in $150$ additional procedures $($instead of the base$-$case estimate of $100)?$

$5.$ What will the NPV of the simulation program be if only $0\mathrm{.}25\%$ of colonoscopies result in the need for additional surgery $($instead of the base$-$case estimate that $2\%$ of colonoscopies will require follow$-$up surgery$)?$

$6.$ What will the NPV of the simulation program be if the profits from additional polyp$-$removal surgeries are $$250$ per surgery $($instead of the $$1,000$ base$-$case estimate$)?$

$7.$ What will the NPV of the simulation program be if the profits from additional polyp$-$removal surgeries are $$1,250$ per surgery $($instead of the $$1,000$ base$-$case estimate$)?$

$8.$ Based on your answers to questions $3-7$ and your sensitivity analysis, which of your three assumptions $($the number of additional annual procedures, the percent of procedures resulting in follow$-$up surgeries and the profit from each surgery$)$ do you think is most important to the financial success of the proposed simulation?

$9.$ The practice manager for the gastroenterology believes that the simulation can$$t be a financial success without increasing colonoscopy volume. $($Hopefully you agree$).$

She wants to use this information to insure the success of the project. Since most of the new procedures will be offered after $5$pm$,$ she considers offering an $$evening discount$$ on the price. This would reduce the assumed revenue per procedure. Assuming that the number of additional procedures stays constant, what$$s the lowest price the practice can offer for an after$-$hours procedure without losing money on the simulation project?