Week 6: Case Study Assignment Hide Assignment Information Turnitin??? I

Week 6: Case Study Assignment Hide Assignment Information Turnitin??? I will translate it into my own words! This assignment will be submitted to Turnitin???. Instructions Week 6 – Case Study Assignment Course Outcomes for Assignment: Effectively gather financial and market information to guide strategic decision making and improve patient outcomes. Act on financial and market information to guide strategic decision making and improve patient outcomes. Instructions: Due Tuesday of Week 6 by 11:59 pm EST. Read Case 20 (pages 127-132) from Gapenski’s Cases in Healthcare Finance – “Coral Bay Hospital.” Create a presentation in Microsoft PowerPoint (PPT), suitable for presentation to a senior level executive. The final product should include a title slide with your name and the name of the case. Two or three slides per question (see below) should be sufficient to respond appropriately to the case prompts. Slide numbers should be included. Use of non-case related graphics is not required. All Excel work should be imported into the presentation in table format (in the body of the document) or enclosed as an Appendix within the same document. Use of external resources and articles is encouraged, but not required. References should be cited in APA format, either as a footnote on the slide where the information / data is used or in an appendix slide. In your presentation, provide a response to the following questions from the case study: What are the NPV, IRR, MIRR, and payback of the proposed ambulatory surgery center? Do the measures indicate acceptance or rejection of the proposed ambulatory surgery center? One board member wants to make sure that a complete risk analysis, including sensitivity and scenario analyses, is performed before the proposal is sent to the board. Perform a sensitivity analysis. What management information is provided by the sensitivity analysis? Perform a scenario analysis. What management information is provided by the scenario analysis? Why is the expected NPV obtained in the scenario analysis different from the base case NPV? A board member is interested in the utilization breakeven of the Center. What are the breakeven values of the three input variables that are highly uncertain? What management information is provided by the breakeven analysis? For some additional guidance on how to construct a professional presentation, please see the link below. https://www.wiley.com/network/researchers/promoting-your-article/6-tips-for-giving-a-fabulous-academic-presentation Due on Sep 24, 2024 11:59 PM Show Rubrics Submit Assignment Files to submit (0) file(s) to submit After uploading, you must click Submit to complete the submission. Add a FileRecord AudioRecord Video Comments Paragraph Lato (Recommended) 19px (Default) Week 5 ExercisesAssignment Due last Tue at 11:59 PM Download the EXCEL Workbook. Complete and Submit the Following Exercises on Each Excel Sheet: Due Tuesday of Week 5 by 11:59 pm EST Week 5 – Capital Budgeting Exercise Week 5 Proj. Risk Analysis Exercise You may adjust the spacing on each sheet to show your work or add additional sheets to show your work for set of questions within each problem. ALL calculations, and figures must be provided in your assignment, where applicable. Student Name: PROBLEM 1: Week 5 and Week 6 Capital Budgeting Assume that you are the CFO at Methodist Hospital in San Antonio. The CEO has asked you to analyze two proposed capital investments: Project X and Project Y. Each project requires a net investment outlay of $11,000, and the cost of capital for each project is 12 percent. The project’s expected net cash flows are as follows: Year Project X Project Y 0 -$11,000 -$11,000 1 $7,000 $3,000 2 $3,000 $3,000 3 $3,000 $4,000 4 $1,000 $4,000 a. Calculate each project’s payback period, net present value (NPV), and internal rate of return (IRR). b. Which project (or projects) is financially acceptable? Explain your answer. a. Complete the table below, solving for the project’s cash flows, paybacks, NPVs (at 12 percent), and IRRs. Project X Project X Project Y Project Y Annual Cumulative Annual Cumulative Year Cash Flow Cash Flow Cash Flow Cash Flow 0 1 2 3 4 Payback NPV IRR b. Which project (or projects) is financially acceptable? Explain your answer. PROBLEM 2: Week 5 and Week 6 Capital Budgeting HCA is evaluating the bulk purchase of new Hill-Rom hospital beds for its Central & West Texas region. The purchase will cost $36,000,000 and the beds have an expected life of five years. The expected pretax salvage value after five years of use is $4,000,000. In total, the beds are expected to generate $9,000,000 in revenue in the first year of operations. Maintenance costs are expected to be $200,000 during the first year of operation, while the increase in utilities will cost another $100,000 across the system in Year 1. The cost for additional expendable supplies is expected to average $250,000 during the first year. All costs and revenues, except depreciation, are expected to increase at a 2.8% inflation rate after the first year. The hospital’s aggregae tax rate is 21.15%, and its corporate cost of capital is 8.4%. The equipment falls into the MACRS five-year class for tax depreciation and hence is subject to the following depreciation allowances: Year Allowance 1 20% 2 32% 3 19% 4 12% 5 11% 6 6% a. Estimate the project’s net cash flows over its five-year estimated life. b. What are the project’s NPV and IRR? (Assume that the project has average risk.) c. Based on the results of the analysis, should this project be approved? a. Complete the table below, solving for the project’s net cash flows over its five-year estimated life. 0 1 2 3 4 5 Equipment cost -$36,000,000 Net revenues Less: Maintenance costs Utilities costs Supplies Depreciation Operating income Taxes Net operating income Depreciation Plus: After-tax equipment salvage value* Net cash flow -$36,000,000 b. What are the project’s NPV and IRR? (Assume that the project has average risk.) c. Based on the results of the analysis, should this project be approved? Student Name: PROBLEM 1: Proj Risk Analysis Parallon Business Solutions, a division of HCA that provides revenue cycle functions, is evaluating two different computer systems for handling provider claims. There are no incremental revenues attached to the projects, so the decision will be made on the basis of the present value of costs. Parallon’s corporate cost of capital is 10 percent. Here are the net cash flow estimates in thousands of dollars: Year System X System Y 0 -$1,300 -$1,100 1 $825 $750 2 $825 $750 3 $825 $750 a. Assume initially that the systems both have average risk. Which one should be chosen? b. Assume that System Y is judged to have high risk. Parallon accounts for differential risk by adjusting its corporate cost of capital up or down by 2 percentage points. Which system should be chosen? PROBLEM 2: Proj Risk Analysis Xenex Inc., a supplier of hospital room disinfection systems, has a cost of capital of 12 percent. To fairly evaluate projects and adjust for risk, it adds or subtracts 2 percentage points to the discount rate. Currently, two mutually exclusive projects are under consideration. Both have a cost of $200,000 and will last four years. Neither project is projected to generate positive cash flows and thus both are evaluated on the basis of costs. However, Project A is judged to be a riskier-than-average project but Project B is determined to a lower than average risk investment. In which project should Xenex invest its capital?

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