Raleigh Medical Clinic is considering acquiring 2 new ultrasound machines for $300,000. The clinic estimates that...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Raleigh Medical Clinic is considering acquiring 2 new ultrasound machines for $300,000. The clinic estimates that the machines will have an economic life of 4 years after which they will have zero salvage value. The machines expects the two machines to generate net revenue of $1,000,000 per year and to require $900,000 per year in fixed costs. The CCC of the clinic is 8 percent. Conduct a sensitivity analysis. Step 1 - Assemble the relevant data System cost $0 Revenue $0 $0 Fixed costs CCC 0% Step 2 -Calculate the net cash flows (000s of dollars) 0 1 System cost Net revenue Fixed costs Net income $0 Step 3 - Calculate net present value NPV $0.00 $0 $0 $0 2 $0 $0 $0 3 $0 $0 $0 4 $0 $0 $0 Step 4 - Calculate the NPV with system cost at -20, -10, 0, +10, and +20 percent of expected System cost: -10% -5% 0% 5% 10% Net revenue: -10% -5% 0% 5% 10% $0 $0 $0 $0 $0 Step 5 - Calculate the NPV with revenue at -20, -10, 0, +10, and +20 percent of expected -10% -5% 0% 5% 10% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0 $0 $0 $0 $0 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Step 6 - Construct a table of data for graph System cost Net revenue $0.00 $0.00 $0.00 $0.00 $0.00 In cell C32 insert "=B28" Select the range B32:C37 From the menu bar choose Data, What-if Analysis, Data Table. Row input cell: leave blank Column input cell: insert =B15 Click OK $0.00 $0.00 $0.00 $0.00 $0.00 In cell C41 insert "=B28" Select the range B41:C46 From the menu bar choose Data, What-if Analysis, Data Table. Row input cell: leave blank Column input cell: insert =B16 Click OK Step 7 - Create graph Step 7 - Interpret graph Raleigh Medical Clinic is considering acquiring 2 new ultrasound machines for $300,000. The clinic estimates that the machines will have an economic life of 4 years after which they will have zero salvage value. The machines expects the two machines to generate net revenue of $1,000,000 per year and to require $900,000 per year in fixed costs. The CCC of the clinic is 8 percent. Conduct a sensitivity analysis. Step 1 - Assemble the relevant data System cost $0 Revenue $0 $0 Fixed costs CCC 0% Step 2 -Calculate the net cash flows (000s of dollars) 0 1 System cost Net revenue Fixed costs Net income $0 Step 3 - Calculate net present value NPV $0.00 $0 $0 $0 2 $0 $0 $0 3 $0 $0 $0 4 $0 $0 $0 Step 4 - Calculate the NPV with system cost at -20, -10, 0, +10, and +20 percent of expected System cost: -10% -5% 0% 5% 10% Net revenue: -10% -5% 0% 5% 10% $0 $0 $0 $0 $0 Step 5 - Calculate the NPV with revenue at -20, -10, 0, +10, and +20 percent of expected -10% -5% 0% 5% 10% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0 $0 $0 $0 $0 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Step 6 - Construct a table of data for graph System cost Net revenue $0.00 $0.00 $0.00 $0.00 $0.00 In cell C32 insert "=B28" Select the range B32:C37 From the menu bar choose Data, What-if Analysis, Data Table. Row input cell: leave blank Column input cell: insert =B15 Click OK $0.00 $0.00 $0.00 $0.00 $0.00 In cell C41 insert "=B28" Select the range B41:C46 From the menu bar choose Data, What-if Analysis, Data Table. Row input cell: leave blank Column input cell: insert =B16 Click OK Step 7 - Create graph Step 7 - Interpret graph
Expert Answer:
Answer rating: 100% (QA)
It seems there is a sensitivity analysis exercise that you need to complete for the Raleigh Medical Clinic which is considering acquiring new ultrasou... View the full answer
Related Book For
Government and Not for Profit Accounting Concepts and Practices
ISBN: 978-1118155974
6th edition
Authors: Michael H. Granof, Saleha B. Khumawala
Posted Date:
Students also viewed these finance questions
-
a. Define "incremental cash flow." 1. Should you subtract interest expense or dividends when calculating project cash flow? 2. Suppose the firm had spent $100,000 last year to rehabilitate the...
-
Shrieves Casting Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The production line...
-
Shrieves Casting Company is considering adding a new line to its product mix, and the capital budgeting analysis is being conducted by Sidney Johnson, a recently graduated MBA. The production line...
-
In 1789, Henry Cavendish estimated the density of the earth by using a torsion balance. His 29 measurements follow, expressed as a multiple of the density of water. (a) Calculate the sample mean,...
-
Z-value for testing p1 - p 2 = d 0 : To test the null hypothesis Ho that p 1? - p 2 = do, where do ? 0, we base our decision on which is a value of a random variable whose distribution approximates...
-
Is the temptation pattern incomplete without the use of other patterns? Explain briefly.
-
Why are mass transfer coefficients from clean drops higher than mass transfer coefficients in dirty systems? What is the practical significance of this?
-
Suppose Molly Jock wishes to purchase a high definition television to watch the Olympic wrestling competition in London. Her current income is $20,000, and she knows where she can buy the television...
-
Revenue and Other Support: ART LEAGUE Statement of Activities For the Year Ended June 30, 2023 Without Donor With Donor Restrictions Restrictions Total $ 0 0 0 0 0 0 0 0 Total Revenue and Other...
-
If the Sommers had chosen the original 15-year, 6.25% mortgage proposal, how much tax shelter would they have lost (over the last five years) as compared to the 30-year, 7.25% mortgage?
-
A manufacturer has decided to locate a new factory in northwestern United States to serve growing demand in that market. They have narrowed the potential sites down to two finalists, City A and City...
-
Bonner Collision has shareholders' equity of $141,800. The firm owes a total of $126,000 of which 60 percent is payable within the next year. The firm net fixed assets of $161,900. What is the amount...
-
A table below shows a simplified balance sheet for Randy Co. The debt has just been refinanced at an interest rate of 6% (short term) and 8% (long term). The expected rate of return on the company's...
-
You notice that a European put option has a price po which satisfies po < PV(K) + PV (div) - Sp. Does an arbitrage opportunity exist? If so, what type of transactions would you execute to achieve...
-
The FCFF and FCFE of OLE Co. last year were $17 billion and $13 billion, respectively. OLE's WACC is 11 percent, and its required rate of return for equity is 13 percent. FCFF is expected to grow at...
-
Jack and Diane are lottery winners. They hold the ticket to the Grand Prize in the Set for Life Prize that makes 20 consecutive annual payments of $50,000 starting immediately. Thus, they receive the...
-
A person deposits $ 1 4 , 0 0 0 at 4 % compounded quarterly. Two years after he makes the first deposit, he adds another $ 2 8 , 0 0 0 , also at 4 % , compounded quarterly. What total amount will he...
-
l ask this second time correnct answer is 38,01 can we look pls Consider a non-conducting rod of length 8.8 m having a uniform charge density 4.5 nC/m. Find the electric potential at P, a...
-
What are the three main sections of the comprehensive annual nancial report? What are the main components of the nancial section?
-
Columbus City was awarded a state reimbursement grant of $150,000 to assist its adult literacy program. The following were signicant events relating to the grant: The city, which is on a calendar...
-
In 2015, the Bakersville Independent School District incurred $12 million in expenditures for teachers salary and benets. In that year, the legislature of the state in which the district is located...
-
Exercises 4-6 show that \(\mathscr{G}\) defined in the proof of Theorem 6.2 is an inner product space. It remains to prove that \(\mathscr{G}\) is an RKHS. This requires us to prove that the inner...
-
Show that a reproducing kernel, if it exists, is unique.
-
Continuing Exercise 4 , let \(\left(f_{n} ight)\) be a Cauchy sequence in \(\mathscr{G}_{0}\) such that \(\left|f_{n}(\boldsymbol{x}) ight| ightarrow 0\) for all \(\boldsymbol{x}\). Show that...
Study smarter with the SolutionInn App