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You are examining a proposal for a new business opportunity. A new procedure can be offered at a price of $ 2 , 5 0

You are examining a proposal for a new business opportunity. A new procedure can be offered at a price of $2,500 and the price increases by 10% each year. The collection rate is expected to be 90%. Demand is anticipated to be 250 units in year one, growing by 250 units each year thereafter until it plateaus at 1,000 visits annually. Each procedure consumes $400 of supplies. Salaries are estimated to cost $850,000 each year plus an additional 25% for fringe benefits. Fixed operating costs are $10,000 per month and annual rent is $16,000/year. Develop a marginal P&L for this business opportunity for a five-year period. Based on that P&L, would you pursue this opportunity?

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