PR $16-43($Algo$)$ Net$-$Present$-$Value Analysis; Hospital $($Section $1)($LO $16-1,16-3)$

Allegheny Community Hospital is a nonprofit hospital operated by the county. The hospital's administrator is considering a proposal to

open a new outpatlent clinic in the nearby clty of New Castle. The administrator has made the following estimates pertinent to the

proposal.

Construction of the clinlc bullding will cost $$860,000$ in two equal Installments of $$430,000,$ to be pald at the end of $200$ and $201.$

Equipment for the clinic will cost $$110,000,$ to be paid in December of $201.$

Staffing of the clinic will cost $$740,000$ per year.

Other operating costs at the clinic will be $$146,000$ per year.

Opening the clinic is expected to Increase charltable contributions to the hospital by $$220,000$ per year.

The clinic is expected to reduce costs at Allegheny Community Hospital. Annual cost savings at the hospital are projected to be

$$940,000.$

A major refurbishment of the clinic is expected to be necessary toward the end of $205.$ This work will cost $$140,000.$

Due to shifting medical needs in the county, the administrator doubts the clinic will be needed after $209.$

The clinic bullding and equipment could be sold for $$220,000$ at the end of $209.$

The hospltal's hurdle rate is $12$ percent.

Use Appendix A for your reference.

Note: Use appropriate factor$($s$)$ from the tables provided.

Required:

$1-3.$ Fill In the following table to compute the net present value of the proposed outpattent clinic.

Should the administrator recommend to the hospltal's trustees that the clinic be bullt?

Complete this question by entering your answers in the tabs below.

Req $1$ to $3$

Fill in the following table to compute the net present value of the proposed outpatient clinic.

Note: Negative amounts should be indicated by a minus sign. Round your "Discount factors" to $3$ decimal places.