Question: I need help performing a sensitivity analysis which shows sensitivity of NPV to procedures per day, average net revenue per procedure, and salvage value. Lastly,
I need help performing a sensitivity analysis which shows sensitivity of NPV to procedures per day, average net revenue per procedure, and salvage value. Lastly, I need to conduct a scenario analysis. Below is the project base data and then what I have so far for the sensitivity analysis.
Project Base Data
| INPUT DATA: | KEY OUTPUT: | ||||
| Land initial cost | $175,000 | NPV | $1,414,375 | ||
| Land opportunity cost (and salvage value) | $200,000 | IRR | 14.7% | ||
| Building/equipment cost | $10,000,000 | MIRR | 12.9% | ||
| Build/equipment salvage value | $5,000,000 | Payback | 4.0 | ||
| Procedures per day | 20 | ||||
| Average net revenue per procedure | $1,000 | ||||
| Labor costs | $696,000 | ||||
| Utilities costs | $50,000 | ||||
| Incremental overhead | $36,000 | ||||
| Supply cost ($/procedure) | $200 | ||||
| Inflation rate on charges | 3.0% | ||||
| Inflation rate on costs | 3.0% | ||||
| Tax rate | 40.0% | ||||
| Revenues lost from inpatient surgeries | $1,000,000 | ||||
| Reduction in inpatient surgery costs | $500,000 | ||||
| Cost of capital | 10.0% | ||||
What I have so far:
| % Deviation | Procedures Per Day | Average Net Revenue Per Procedure | SALVAGE | |||
| from | Units | NPV | Units | NPV | Variable | NPV |
| Base Case | Sold | $1,414,375 | Sold | $1,414,375.00 | Cost | $1,414,375.00 |
| -30% | 14 | 700 | $140,000 | |||
| -15% | 17 | 850 | $170,000 | |||
| 0% | 20 | 1,414,375 | 1000 | 1,414,375 | $200,000 | 1,414,375 |
| 15% | 23 | 1150 | $230,000 | |||
| 30% | 26 | 1300 | $260,000 | |||
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