Treatment Treatment A B Mortality rate 2% 5% Life expectancy for survivors 20 years 10 years Initial treatment cost $10,000 $3,000 Follow-up costs, year 1 $5,000 $1,000 Annual follow-up costs, all subsequent $1,000 $500 уears
Treatment Treatment A B Mortality rate 2% 5% Life expectancy for survivors 20 years 10 years Initial treatment cost $10,000 $3,000 Follow-up costs, year 1 $5,000 $1,000 Annual follow-up costs, all subsequent $1,000 $500 уears
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
Problem 18E
Related questions
Question
The following information has been gathered on
the costs and effectiveness of the two treatments, A
and B. In this problem, costs and consequences are
not discounted.
a. What is the total cost for the survivors receiving
treatment A? For decedents (assuming sudden
death)?
b. What is the total cost for survivors receiving
treatment B? For decedents?
c. What is the expected cost for those patients
receiving treatment A? And treatment B?
d. Draw a simple decision tree showing the costs
and consequences of each treatment option.
e. Calculate the incremental cost and incremental
benefit of the treatment alternatives.
f. What is the ICER?
Transcribed Image Text:Treatment
Treatment
A
B
Mortality rate
2%
5%
Life expectancy for
survivors
20 years
10 years
Initial treatment cost
$10,000
$3,000
Follow-up costs,
year 1
$5,000
$1,000
Annual follow-up
costs, all subsequent
$1,000
$500
уears
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- Calculate the incremental cost and incremental benefit of the treatment alternatives.
- What is the ICER?
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