Question: consider the project contained in problem 14.7 in chapter 14. a. perform a sensitivity analysis to see how NPV is affected by changes in the

consider the project contained in problem 14.7 in chapter 14. a. perform a sensitivity analysis to see how NPV is affected by changes in the number of procedures per day, average collection amount, and salvage value. b. conduct a scenario analysis. suppose that he hospital's staff concluded that the three most uncertain variables were number of procedures per day,average collection amount, and the equipment's salvage value. futhermore the following data were developed: scenario ____ probability ____ number of procedues ____ average collection ____ equipment salvage valu worst _____ 0.25 _____ 10 _________________ $60 ________ $100,000 most likely ___ 0.50 ______ 15 _________________ 80 __________ 200,000 best _______ 0.25 _______ 20 _________________ 100 __________ 300,00 c. finally assume that California Health Center's average project has a coefficient of variation of NPV in the range of 1.00-2.0.(hint: the coefficient of variation is defined as the standard deviation of NPV divided by the expected NPV) The hospital adjusts for risk by adding or subtracting 3 percentage points to its 10 percent corporate cost of capital. after adjusting for differential risk, is the project still profitable? d. what type of risk was measured and accounted for in parts b and c? should this be of oncern to the hospital's managers

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