Question
Using the historical data as a guide, in exhibit 6.1, we'll use the January/February 2014 average for the number of visits and net revenue, because
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Using the historical data as a guide, in exhibit 6.1, we'll use the January/February 2014 average for the number of visits and net revenue, because the case states that (1) clinic usage is not seasonal and (2) a competitor recently closed its doors. These facts lead us to conclude that the most recent historical data is the best estimate for the future. For the remaining cash flows, we use either the 2013 average monthly data or the January/February 2014 average or the combined average, depending on which historical amount we thought to be most representative of the future. Using this data we conclude the Breakeven occurs at approximately 20 incremental visits (65 daily patient visits) without a new marketing plan. Would you recommend keeping the clinic open? Explain your reasoning.
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