DEVELOP A SPREADSHEET MODEL TO CALCULATE THE NPV OF PROFIT OVER THE NEXT THREE YEARS.The Hyde Park Surgery Center specializes in high-risk cardiovascular surgery. The center needs to forecast its profitability over the next three years to plan for capital growth projects.

DEVELOP A SPREADSHEET MODEL TO CALCULATE THE NPV OF PROFIT OVER THE NEXT THREE YEARS.The Hyde Park Surgery Center specializes in high-risk cardiovascular surgery. The center needs to forecast its profitability over the next three years to plan for capital growth projects.

The Hyde Park Surgery Center specializes in high-risk cardiovascular surgery. The center needs to forecast its profitability over the next three years to plan for capital growth projects. For the first year, the hospital anticipates serving 1,500 patients, which is expected to grow by 8% per year. Based on current reimbursement formulas, each patient provides an average billing of $150,000, which will grow by 3% each year. However, because of managed care, the center collects only 35% of billings. Variable costs for supplies and drugs are calculated to be 12% of billings. Fixed costs for salaries, utilities, and so on, will amount to $20,000,000 in the first year and are assumed to increase by 6% per year. Develop a spreadsheet model to calculate the NPV of profit over the next three years. Use a discount rate of 7%. Define three reasonable scenarios that the center director might wish to evaluate and use the Scenario Manager to compare them.


 

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