Case 10 Essay example

According to exhibit # 2, in order to break even annually, the clinic will have to cover the total operating expenses of $690,000. That means that the clinic will have to perform 986 scan per year, or approximately 4 scans per day to achieve this goal. Considering that the equipment in the clinic is capable of much more, this operation should have no problem in reaching and exceeding its goal daily if proper measures are put into place.

To make the most informed decision the IRRs and payback periods of the projects should be compared in conjunction with the NPVs of the two projects. The NPV analysis of the two projects under consideration indicates that the MMDC Project is the better of the two projects.

In figure 2, we have varied the prediction accuracy of the law research firm and based on the graph we have come to the conclusion that with associated cost of $ 0.7 million the research firm should have accuracy greater than 0.9 to reduce the expected monetary value than $ 4.5 million

6. How does the current reimbursement level of $140,000 per case affect a decision to use or not use marginal cost pricing? Does the amount of excess capacity affect the decision? Why?

The economic cost for the clinic due to waiting times rise. By taking more time to process the patients, the clinic cannot reach its potential of seeing 108 patients. This of course results in less revenue. Currently the clinic operates at 74% capacity, resulting in a loss of 26% revenue.

Stephens Security has two financing alternatives: (1) A publicly placed $50 million bond issue. Issuance costs are $1 million, the bond has a 9% coupon paid semiannually, and the bond has a 20-year life. (2) A $50 million private placement with a large pension fund. Issuance costs are $500,000, the bond has a 9.25% annual coupon, and the bond has a 20-year life. Which alternative has the lower cost (annual percentage yield)?

(TCO B) You are the project manager for three projects. You are about to estimate costs for these three projects. Given the below information on each project, recommend an appropriate estimation method and justify your answer for each.

17. St. Augustine Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with

a) In the first set of calculations, the staff used a discount rate of 20%, a five-year time horizon, and ignored taxes and terminal value. What is the relative attractiveness of these three alternatives?

"a. If each project's cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what

We started the case analysis by the normality test for the current data to check if the data is normally distributed or not. Our objective is to calculate the current Total Cost and then come up with a better solution to lower the cost.

This method of calculating costs could be beneficial or not depending on the organization and its size. In a healthcare setting, any healthcare institution is seen as delivering quality care and therefore most decisions regarding choice of the institution come down to the pricing. In order to compete for patients, the healthcare institution must bring its price down to the absolute margin. This will over time affect the institution badly as it will leave the institution without funds to replace the capital equipment. This can eventually lead to closing down of the financially weaker

When figuring out the costs for revenues you need to figure out how much the network will earn from all the scans done throughout the five year period. When configuring revenue associated with scans you need to look for total payments which are nineteen thousand and six hundred and ninety then multiple total payments by fifty weeks. This equals out to nine hundred and eighty four thousand and five hundred annually, then multiple the annual revenue by five years. The total scan revenue for five years comes out to four million and nine hundred and twenty two thousand and five hundred dollars. The next amount added to the revenues for the physician’s network is the amount the MRI machine can be salvaged for which are seven hundred and fifty thousand dollars. The next equation to configure is the total revenue costs. How you configure the total revenue costs is by adding the total scan revenues and the salvage costs, which equals out to five million and six hundred and seventy two thousand and five hundred dollars. The final equation is to figure out the net revenues of the MRI machine and that is to take the total revenues and subtract the total expenses for five years. The total revenue is five million and six hundred and seventy two thousand and five hundred and you then subtract the total expenses, which is

2. Compute the NPV of both projects. Which would you recommend? What if they are not mutually exclusive?

Please discuss the possibilities of increasing Kamp’s profit by using the formula for basic cost per unit and by reorganizing. Please use a concrete example to indicate how the board of Kamp can manipulate the unit costs for the types 2, 3, and 4 by reorganizing its cost information system. How, do you think, can the boards of the Vecu concern and the MB division determine whether Kamp manipulates data on unit costs?