Required information

PR $16-43($Statlc$)$ Net$-$Present$-$Value Anolysls; Hospltal $($Section $1)($LO $16-1,16-3)$

$[$The following information applles to the questions displayed below.$]$

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

proposal to open a new outpatlent clinic in the nearby city of New Castle. The adminlstrator has made the following

estlimates pertinent to the proposal.

Construction of the clinic bullding will cost $$780,000$ in two equal Installments of $$390,000,$ to be pald at the end of

$200$ and $201.$ The clinic will open on January $2,202$ All staffing and operating costs begin In $202$

Equipment for the clinlc will cost $$150,000,$ to be pald in December of $201.$

Staffing of the clinic will cost $$800,000$ per year.

Other operating costs at the clinic will be $$200,000$ per year.

Opening the clinic is expected to Increase charltable contributions to the hospital by $$250,000$ per year.

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

projected to be $$1,000,000.$

A major refurbishment of the clinic is expected to be necessary toward the end of $205.$ This work will cost $$180,000.$

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 $$290,000$ at the end of $209.$

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

Use Appendlx A for your reference.

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

PR $16\mathrm{.}43($Statlc$)$ Part $1$ Compute the cash flows for each year relevant to the analysis.

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 hospital's trustees that the clinic be bullt?

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

Req $1$ to $3$

Req $4$

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

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