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You are examining a proposal for a new business opportunity - a new procedure for which demand is expected to be 1,400 units the first

You are examining a proposal for a new business opportunity - a new procedure for which demand is expected to be 1,400 units the first year, growing by 600 units a year thereafter. The price charged per procedure is $1,000. The collection rate is anticipated to be 80%. Each procedure consumes $300 of supplies. Salary cost is estimated to cost $540,000 each year, fringe benefits are 25% of salaries, rent for the facility is $55,000/yr and operating cost are $120,000/yr.

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  1. Develop a marginal profit and loss statement for this business opportunity.
  2. Based on that analysis, should this opportunity be pursued?

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