Question: I need help with my assignment that is due today, I have completed the assignment, however, I am not sure if I completed it correctly.
I need help with my assignment that is due today, I have completed the assignment, however, I am not sure if I completed it correctly.
| HC 306 - Unit 5 Assignment | |||||||
| You are a practice manager for Eden Wellness and Aesthetics - a successful and high patient volume med-spa. As the practice manager, you are responsible for arranging financing for equipment purchases and determining pricing for new services. You have been asked to purchase a laser machine, with a purchase price of $25,000. You will need to determine the treatment price for patients, and how many treatments must be sold to reach a profitable return on the investment. For this scenario, you will only be factoring in the cost of purchasing the laser machine, not additional costs of supplies, administrative expenses, etc. | |||||||
| Consider this information as you work through the Excel document: | |||||||
| Opportunity cost of capital is 12% Estimate cash flows (treatment price) for six months Competitor pricing for this procedure is $1,200 | |||||||
| COMPLETE ALL YELLOW CELLS | |||||||
| # of treatments at $ 1167.00 each | Net Present Value (NPV) | # of treatments at $1167.00 each | Internal Rate of Return (IRR) | ||||
| 12% | Project (opportunity) cost of capital | 12% | Project (opportunity) cost of capital | ||||
| $ (25,000) | Cash flow month 0 | $ (25,000) | Cash flow month 0 | ||||
| Example: 4 at $1167.00 | $ 4,668 | Cash flow month 1 | Example: 4 at $ 1167.00 | $ 4,668 | Cash flow month 1 | ||
| $ 4,668 | Cash flow month 2 | $ 4,668 | Cash flow month 2 | ||||
| $ 4,668 | Cash flow month 3 | $ 4,668 | Cash flow month 3 | ||||
| $ 4,668 | Cash flow month 4 | $ 4,668 | Cash flow month 4 | ||||
| $ 4,668 | Cash flow month 5 | $ 4,668 | Cash flow month 5 | ||||
| $ 4,668 | Cash flow month 6 | $ 4,668 | Cash flow month 6 | ||||
| $ (5,807.95) | NPV <-- a formula is used in this cell so calculations are automatic | 3% | IRR <-- a formula is used in this cell so calculations are automatic | ||||
| For this to be a profitible investment, should NPV be positive or negative? | For this to be a profitible investment, should IRR exceed the project cost of capital or not? | ||||||
| In order for the investment to be profitible, the NPV should be positive. | For the IRR to be a profitible invsetment, the IRR should be postive and should exceed the prohect cost of capital. | ||||||
| Briefly explain when profitibility will be achieved (how many months or treatments sold). | |||||||
| Profitibility was achieved during month 6 of cash flow. Specifically, it was achieved at 22 units. | |||||||
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