Posted: June 16th, 2022

# UVa Health System: The Long-Term Acute Care Hospital Project

wk3_assignment.xlsxwk4_assignment.xlsx

ATTACHED FILE(S)

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ase a quick read to understand what is going on – about

## Q1-COST of CAPITAL (K-wacc)

0

%

given

0%

0.00% given

0.00% given

0.00 given

0.00%

%

0.00%

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 COMPUTE WEIGHTED AVERAGE COST OF CAPITAL enter data in blue-colored cells BASIC: Formula Equation COST OF DEBT: Coupon Rate 0.0 given Marginal Tax Rate 0.0% Cost of Debt 0.00% b5*(1-b6) k-d = I x (1-t) weight of debt d ÷ d+e COST OF EQUITY: Risk-Free Rate Risk Premium R-m – R-f Beta Cost of Equity b11+(b13*b12) k-e = R-f + [ß x (R-m – R-f)] weight of equity 100 1-b8 e ÷ d+e Weighted-Average Cost of Capital (b8*b7)+(b15*b14) (k-d x wt-d)+(k-e x wt-e) Above is the template explained in chapter 5 pps 70-76. Use the template to answer Q1. Q1: Page 75 in Cohen Finance Workbook displays a K-wacc calculation for a company. Suppose that the inputs to that k-wacc calculation have changed. The company’s financial risk has increased, so its coupon rate is now 9%. Its marginal tax rate increased to 30%. To reduce financial risk, its ‘target’ weight of debt is reduced to 30%. The risk-free rate on treasury bonds is now 2%. The risk premium stays the same at 8%. The beta, reflecting higher financial risk, rises to 1.5 Recalculate k-wacc, using the template at the top of this page. Explain the significance of the change in k-wacc to the capital budgeting analysis and recommendation. Use the box below:

## Q2-NWC

1000.0 1000.0 1000.0 1000.0

22.0 22.0 22.0

30

82.2 82.2 82.2 82.2

50

3.0 3.0 3.0 3.0

25 1.5 1.5 1.5 1.5 1.5

83.7 83.7 83.7 83.7

0.0

83.7 0.0 0.0 0.0 0.0

Change in Net Working Capital:

Revenue 1000.0

Cost of goods sold 22.0

Receivables (enter days in Column B) 30 82.2

Inventory (enter days in Column B) 50 3.0

4.2

Payables (enter days in Column B) 25 1.5

2.0

Net working capital needs 83.7

Liquidation of working capital 0.0
Investment in working capital 83.7

8.4 8.4 8.4

Change in Net Working Capital:
Revenue 1000.0 1100.0 1200.0 1300.0 1400.0
Cost of goods sold 22.0

26.4 28.6 30.8

Receivables (enter days in Column B) 60

Inventory (enter days in Column B) 100

7.2

8.4

Payables (enter days in Column B) 25 1.5 1.7 1.8 2.0 2.1

Net working capital needs

Liquidation of working capital 0.0

Investment in working capital 168.9

16.9 16.9 16.9

 Go to the bottom of p 68 in the Cohen Finance Workbook. There is no picture of a faucet – but – visualize a sink faucet turning on and off, controlling the flow of water. Picture a receivables faucet, an inventory faucet, and a payables faucet. The number of days can be lower (faucet turned low) or higher (faucet turned high). This is how net working capital is controlled, by setting the number of days of each. The investment in working capital is one of the entries in a forecast. This question helps you learn how to forecast net working capital. Q2a – Explain how the table below works, i.e., what are the inputs, what are the outputs, and how are the inputs transformed into the outputs. HINT: Examine the formulas in the cells. Change in Net Working Capital: Revenue 1000.0 Cost of goods sold 2 2.0 22.0 \$ signs in the formula ‘fix’ the cell so Receivables (enter days in Column B) 82.2 the formula can be copied to other cells Inventory (enter days in Column B) 3.0 without changing that cell, i.e., Payables (enter days in Column B) copying on a ‘fixed’ rather than a ‘relative’ basis Net working capital needs 83.7 Liquidation of working capital at the end of a project’s life, working capital is liquidated Investment in working capital Answer Q2a in this box: Q2b – Row 43 changes compared to row 14 in Q2a. Explain how the investment in working capital changes (compared to the amount in Q2a) and why. 1100.0 1200.0 1 300.0 1400.0 2 4.2 26.4 28.6 30.8 90.4 98.6 106.8 115.1 3.3 3.6 3.9 1.7 1.8 2.1 92.1 100.4 108.8 11 7.2 8.4 Answer Q2b in this box: Q2c – B71 and B72 are changed from the number of days in Q2a and Q2b. Explain how the investment in working capital changes (compared to the amount in Q2b) and why. 24.2 164.4 180.8 197.3 213.7 230.1 6.0 6.6 7.8 168.9 185.8 202.7 219.6 236.5 16.9 Answer Q2c in this box:

## Q3-METRICS

calculations that were discussed in MBAD 6233 Financial Markets.

:

3.1

1.8

300.0 0.0 0.0 0.0 0.0 0.0

0.0

Free cash flow

-300.0

Internal Rate of Return (IRR)

Project C

25,000 200,000

25,000 200,000

25,000 25,000

25,000

IRR
PP
 Recall the Internal Rate of Return (IRR) Free cash flow Operating cash flow 72.6 88.8 105.1 109.6 124.3 Minus: Invesment in net working capital 12.3 3.1 0.9 Minus: Investment in PPE (CapEx) Plus: Salvage value -300.0 60.3 85.7 102.0 108.7 122.5 rounding error Cumulative free cash flow -239.7 -154.0 -52.0 56.7 179.2 Discount rate (K-wacc) 10.9% Net Present Value (NPV) 43.7 Profitability Index (PI) 1.1 15.9% Payback Period (PP) inspection The panel above is extracted from p 85 in Cohen Finance Workbook. Examine the formulas that calculate NPV, PI, and IRR. Estimate PP by inspection using row 9 cumulative free cash flow-the year when cumulative free cash flow becomes a positive number. Q3a Using the data below for the three projects, and the formulas you discerned in B12, B13, and B14, calculate NPV, PI, and IRR for the three projects, using two different k-wacc discount rates, 8% and 11%. The data for Projects A,B,C are arrayed vertically; they are the same as row 8 in the horizontal panel above. Project A Project B Initial Outlay -50,000 -100,000 -450,000 Cash Inflows: Yr 1 10,000 25,000 200,000 Yr 2 15,000 Yr 3 20,000 Yr 4 Yr 5 30,000 enter formulas in the cells in this box NPV at 8% NPV at 11% PI at 8% PI at 11% Q3b Interpret the meaning of the calculations you made in Q3a. Hint: Do you recommend accepting or rejecting the projects? Hint: What is the impact on the decision metrics when k-wacc changes from 8% to 11%? Hint: Do all three decision metrics lead to the same recommendation?

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in the case.

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Scroll down until you see the questions.

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 Case UVa Health System: The LATC Hospital Project Wk 4 is the second of two weeks on CAPITAL BUDGETING Study the Wk 3 Solutions Template before proceeding into Wk 4. Learning Objectives (repeated from Wk3 Assignment Template) You will learn the three steps in capital budgeting: SEE THE FLOW DIAGRAM – YOU ARE NOW WORKING ON THE GREEN-COLORED ANALYSIS. Identify relevant incremental cash flows Calculate cost of capital (k-wacc) to use as the discount rate Calculate the metrics of capital budgeting: Net Present Value, Profitability Index, Internal Rate of Return, and Payback Period. Then, you will apply the metrics and information in the case study to make a recommendation about which of the two projects to accept. The essence of the capital budgeting process is to make sure, before an investment is made, that its prospective rate of return is high enough to justify the investment, i.e., that the project is CREATES value, not DESTROYS value. Directions (some repeating from Wk3 Assignment Template) Make a quick scan through the LTAC case and the exhibits. Listen to the Intro Audio Cohen Finance Workbook chapter 4 is a review of Time Value of Money, which you covered in a previous course. Review it as necessary, but defer the review until you look at the TVM applications in chapter 5 beginning on p 79. You need to know TVM to understand the capital budgeting metrics of NPV IRR have that context in mind before reviewing the TVM chapter 4 (only if you need to). Read the case again, to grasp all the details, especially the Mulroney memo to her boss. To understand how a capital budgeting template works, follow the step-by-step procedure in the book, pages 61-70 Scan pages 70-76 on weighted average cost of capital. No need to emphasize at this point because discount rates are given Read pages 79-84 on NPV, PI, IRR, PP. Pages 83-85 show a worked-out example of a capital budgeting decision. Questions If you work with a group, write answers on your own, independently. Group answers violate academic integrity requirements. See Q1 tab. Scroll down until you see the questions. Capital Budgeting Template The template calculates FREE CASH FLOW=[EBIT-TAX+DEPREC]+/-CHANGE NWC+/-CAPEX. See Q2 tab. K-wacc The 1st term is income statement data; the 2nd & 3rd terms are balance sheet data. See Q3 tab. Sensitivity Analysis LEARN THIS FORMULA (EQUATION) COLD! Expect to revisit these calculations and decisions in Wk7.

## Q1 Capital Budgeting Template

50 NPV

NPV

1

IRR

IRR

ease in Utilization

4%

K-wacc

Year 1 2 3 4 5 6 7 8 9 10

18,250 18,250 18,250 18,250 18,250 18,250 18,250 18,250 18,250

Utilization 26% 60%

13 30 31 32 34 35 36 38 39 41

30 27 27 27 27 27 27 27 27 27

/Census

3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5

Full-Time Employees 62

57

158

46 118

138

38 97

105 109 114 118 123 128 133

9% 14 37 38 39 41 43 44 46 48 50

2% 3 8 8 9 9 9 10 10 11 11

158 406 422 439 456 474 493 513 534 555

Annual Incr

1.3%

\$35,000 1.3%

1% 70

(000 omitted)

Annual Incr

3%

8%

NA

3% 200

232

246

500 500 500 500 500 500 500 500 500 500

(000 omitted)

Total Expenses 7,840 13,896 14,585 15,316 16,092 16,915 17,789 18,717 19,702 20,749

3,751

16.3%

487

548

617

30 days 93

253

Net Working Capital 666

666

67 70 72 75 78 81 85 88

Calculation

Operating Profit (804) 3,769 3,787 3,791 3,779 3,751 3,703 3,635 3,544 3,427

500 500 500 500 500 500 500 500 500 500

(7,500) 0 0 0 0 0 0 0 0 0

Free Cash Flows (000 omitted) (7,500)

4,220

4,176

\$5,687 (000 ommited)

17.6%

Year 1 2 3 4 5 6 7 8 9 10

NWC Recovery 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0

\$10,425 (000 ommited) (7,500) (8,470) 3,263 4,220 4,221 4,207 4,176 4,125 4,054 3,959

21.2%

(000 ommited)

14.2%

UNIVERSITY OF VIRGINIA MEDICAL CENTER
Long Term Acute Care Hospital Free Cash Flow Projections
Revenue and Cost Assumptions Results-No

NWC Recovery Results-NWC Recovery
Number of Beds \$5,687 \$10,425 (000 ommited)
Year Utilization 26% 17.6% 21.2%
Year 2 Utilization 60%
Annual Incr
Operating Expense (% of Revenue) 7.0%
10%
VOLUME
Patient Day Capacity 18,250
62% 65% 67% 70% 73% 76% 79% 82%
Patient Days Used 4,745 10,950 11,388 11,844 12,317 12,810 13,322 13,855 14,409 14,986
Average Patient Census per Day
Average Length of Stay
Number of Patients per Year 158 406 422 439 456 474 493 513 534 555
Full-Time Employees 4.8 3.5
105 109 114 118 123 128 133 138 144
INSURANCE PAYER Patient Mix
Medicare 36% 146 152 164 171 178 185 192 200
Medicaid 29% 122 127 132 143 149 155 161
Commercial Payers 24% 101
Other
Indigent
Billing
Medicare—bill per patient \$27,795 0.0% 1,583 4,058 4,220 4,389 4,565 4,747 4,937 5,135 5,340 5,554
Medicaid—bill per patient \$35,000 1.3% 1,605 4,170 4,337 4,510 4,691 4,878 5,073 5,276 5,

487 5,707
Commercial Payers—bill per day \$2,800 5.0% 3,189 7,726 8,035 8,357 8,691 9,039 9,400 9,776 10,167 10,574
Other—bill per patient \$38,

500 548 1,424 1,480 1,540 1,601 1,665 1,732 1,801 1,873 1,948
Indigent—bill per patient 111 288 299 311 323 336 350 364 378 394
Total Revenue (000 omitted) 7,035 17,665 18,372 19,107 19,871 20,

666 21,493 22,352 23,

246 2

4,176
Less Uncollectable 177 184 191 199 207 215 224 232 242
Total Net Revenue 6,965 17,489 18,188 18,916 19,672 20,459 21,278 22,129 23,014 23,935
EXPENSES
Salary, Wage, Benefits (based on \$ per employee) \$60,250 3,760 6,516 6,980 7,477 8,009 8,580 9,190 9,845 10,546 11,297
Supplies, Drugs, Food (% net revenue) 16.3% 1,135 2,851 2,965 3,083 3,207 3,335 3,468 3,607 3,751 3,901
Management Fees (% net rev) 557 1,399 1,455 1,513 1,574 1,637 1,702 1,770 1,841 1,915
Operating Expenses (fixed + 7 % net rev) \$1,200,000 1,688 2,424 2,473 2,524 2,577 2,632 2,689 2,749 2,811 2,875
Land Lease per year \$200,000 206 212 219 225 239 253 261
Depreciation (straight line 30yrs) \$15,000,000
Total Expenses 7,840 13,896 14,585 15,316 16,092 16,915 17,789 18,717 19,702 20,749
Operating Profit (804) 3,769 3,787 3,791 3,779 3,703 3,635 3,544 3,427
Operating Margin -11.4% 21.3% 20.6% 19.8% 19.0% 18.1% 17.2% 15.2% 14.2%
Net Working Capital Notes:
Accounts Receivable 30 days 572 1,437 1,495 1,555 1,

617 1,682 1,749 1,819 1,892 1,967
Inventory Supplies, Drugs, Food 60 days 187 469 507 527 570 593 641
Accounts Payable 234 244 264 274 285 296 308 321
1,672 1,739 1,808 1,880 1,956 2,034 2,115 2,200 2,288
Change in NWC 1,006
Free Cash Flows
Less Capital Expenditures (7,500)
Less Increase in Net Working Capital (666) (1,006) (67) (70) (72) (75) (78) (81) (85) (88)
(8,470) 3,263 4,221 4,207 4,125 4,054 3,959 3,839
NPV (no recovery in year 10)
IRR (no recovery in year 10)
\$2,288
Sale of Facility at Book Value \$10,000
NPV with Year 10 Recovery 16,127
IRR with Year 10 Recovery
Net Profit (Operating Profit – Interest) (2,004) 2,569 2,587 2,591 2,579 2,551 2,503 2,435 2,344 2,227
Net Profit/Net Revenue -28.8% 14.7% 13.7% 13.1% 12.5% 11.8% 11.0% 10.2% 9.3%
Study the above analysis carefully, examining the inputs, outputs, and formulas used to do the calculations.
Q1a Mulroney did not use working capital cash flows in her original analysis. The analysis above
includes incremental investment in working capital. Discuss why she was either correct or incorrect not to
include them.
Q1b Compare the decision metrics NPV & IRR for the “no recovery of NWC” and “recovery of NWC” scenarios,
stating which scenario best captures reality. Based on your answer, give the project a green or red light.
Q1c Examine the decision metric ‘profit margin’, and explain if it leads to a green or red light for this project.
Even though the board of directors uses this metric, it is defective. Explain why. HINT: FCF definition.

## Q2 K-wacc

%

given

0.0% given

4.72%

0%

0.00% given

0.00% given

0.00 given

0.00%

A+

A

0.00%

A-

+

BBB

BB

BB-

B+

B

A B BB B-

0.60

If LATC was a project in a for-profit hospital like HCA

 COMPUTE WEIGHTED AVERAGE COST OF CAPITAL BASIC: Formula Equation Case Exhibit 4 COST OF DEBT: U.S. Treasury Yields Coupon Rate 0.00 1-year 4.77% Marginal Tax Rate 5-year 4.72% Cost of Debt 0.00% b5*(1-b6) k-d = I x (1- t) 10-year weight of debt d ÷ d+e 30-year 4.73% Data source: http://federalreserve.gov/releases/h15/data.htm (accessed March 2006). COST OF EQUITY: Risk-Free Rate Corporate Bond Yields Risk Premium R-m – R-f AAA 5.31% Beta AA 5.38% Cost of Equity b11+(b13*b12) k-e = R-f + [ß x (R-m – R-f)] weight of equity 100% 1-b8 e ÷ d+e 5.41% 5.45% Weighted-Average Cost of Capital (b8*b7)+(b15*b14) (k-d x wt-d)+(k-e x wt-e) 5.53% BBB 5.62% 5.88% For-Profit Comparables B BB- 6.07% HCA Inc Community Health Health Management Associates Revenues (millions) \$24,475 \$3,720 \$3,580 BB+ 6.40% Assets (millions) \$5,222 \$961 \$997 6.79% Total debt (millions) \$9,278 \$1,810 \$1,014 6.96% Stock price (\$/share) \$52.12 \$39.73 \$23.25 Shares outstanding (millions) 452.7 88.5 247.2 7.39% Market cap (millions) \$23,593 \$3,517 \$5,747 7.57% Bond rating 7.84% Beta 0.60 0.70 Data source: Bloomberg, “Fair Market Curve Analysis,” 10-Year Corporate Bonds, March 2, 2006. Q2a Calculate the K-wacc for HCA using the template above. Enter the data that you have in the case and the table above. If you need additional data, assume it using your good judgment from what you have learned so far in the course. In the answer box, cite your result, compare it to the K-wacc used in the Q1 analysis, and explain how your revised K-wacc would change the Q1 results. Q2b If LATC was a project in a for-profit hospital like HCA above, would the NPV be higher or lower? Explain ‘analytically’ by examining all relevant inputs to NPV. Q2c above, would the IRR be higher or lower? Explain. HINT: To avoid getting trapped by this question, make sure your answer is ‘analytical’, i.e., examine all relevant inputs and output. Q2d Can a non-profit hospital accept projects that a for-profit hospital would reject?

## Q3 Sensitivty Analysis

UNIVERSITY OF VIRGINIA MEDICAL CENTER
Long Term Acute Care Hospital Free Cash Flow Projections

Revenue and Cost Assumptions

Results-NWC Recovery
Number of Beds 50 NPV \$5,687 NPV \$10,425 (000 ommited)

26% IRR 17.6% IRR 21.2%
Year 2 Utilization 60%

4%
Operating Expense (% of Revenue) 7.0%

K-wacc

Year 1 2 3 4 5 6 7 8 9 10
VOLUME
Patient Day Capacity 18,250 18,250 18,250 18,250 18,250 18,250 18,250 18,250 18,250 18,250
Utilization 26% 60% 62% 65% 67% 70% 73% 76% 79% 82%
Patient Days Used 4,745 10,950 11,388 11,844 12,317 12,810 13,322 13,855 14,409 14,986
Average Patient Census per Day 13 30 31 32 34 35 36 38 39 41
Average Length of Stay 30 27 27 27 27 27 27 27 27 27
Number of Patients per Year 158 406 422 439 456 474 493 513 534 555

4.8 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5
Full-Time Employees 62 105 109 114 118 123 128 133 138 144

INSURANCE PAYER Patient Mix
Medicare 36% 57 146 152 158 164 171 178 185 192 200
Medicaid 29% 46 118 122 127 132 138 143 149 155 161
Commercial Payers 24% 38 97 101 105 109 114 118 123 128 133
Other 9% 14 37 38 39 41 43 44 46 48 50
Indigent 2% 3 8 8 9 9 9 10 10 11 11
158 406 422 439 456 474 493 513 534 555

Billing Annual Incr
Medicare—bill per patient \$27,795 0.0% 1,583 4,058 4,220 4,389 4,565 4,747 4,937 5,135 5,340 5,554
Medicaid—bill per patient \$35,000 1.3% 1,605 4,170 4,337 4,510 4,691 4,878 5,073 5,276

5,707
Commercial Payers—bill per day \$2,800 5.0% 3,189 7,726 8,035 8,357 8,691 9,039 9,400 9,776 10,167 10,574
Other—bill per patient

1.3% 548 1,424 1,480 1,540 1,601 1,665 1,732 1,801 1,873 1,948
Indigent—bill per patient \$35,000 1.3% 111 288 299 311 323 336 350 364 378 394
Total Revenue (000 omitted) 7,035 17,665 18,372 19,107 19,871

21,493 22,352

Less Uncollectable 1% 70 177 184 191 199 207 215 224 232 242
Total Net Revenue (000 omitted) 6,965 17,489 18,188 18,916 19,672 20,459 21,278 22,129 23,014 23,935

EXPENSES Annual Incr
Salary, Wage, Benefits (based on \$ per employee) \$60,250 3% 3,760 6,516 6,980 7,477 8,009 8,580 9,190 9,845 10,546 11,297
Supplies, Drugs, Food (% net revenue) 16.3% 1,135 2,851 2,965 3,083 3,207 3,335 3,468 3,607 3,751 3,901
Management Fees (% net rev) 8% 557 1,399 1,455 1,513 1,574 1,637 1,702 1,770 1,841 1,915

Operating Expenses (fixed + 7 % net rev) \$1,200,000 NA 1,688 2,424 2,473 2,524 2,577 2,632 2,689 2,749 2,811 2,875
Land Lease per year \$200,000 3% 200 206 212 219 225 232 239 246 253 261
Depreciation (straight line 30yrs) \$15,000,000 500 500 500 500 500 500 500 500 500 500
Total Expenses (000 omitted) 7,840 13,896 14,585 15,316 16,092 16,915 17,789 18,717 19,702 20,749

Total Expenses 7,840 13,896 14,585 15,316 16,092 16,915 17,789 18,717 19,702 20,749

Operating Profit (804) 3,769 3,787 3,791 3,779 3,751 3,703 3,635 3,544 3,427
Operating Margin -11.4% 21.3% 20.6% 19.8% 19.0% 18.1% 17.2% 16.3% 15.2% 14.2%

Net Working Capital Notes:
Accounts Receivable 30 days 572 1,437 1,495 1,555

1,682 1,749 1,819 1,892 1,967
Inventory Supplies, Drugs, Food 60 days 187 469 487 507 527 548 570 593 617 641
Accounts Payable 30 days 93 234 244 253 264 274 285 296 308 321
Net Working Capital 666 1,672 1,739 1,808 1,880 1,956 2,034 2,115 2,200 2,288
Change in NWC 666 1,006 67 70 72 75 78 81 85 88

Operating Profit (804) 3,769 3,787 3,791 3,779 3,751 3,703 3,635 3,544 3,427
Add Depreciation 500 500 500 500 500 500 500 500 500 500
Less Capital Expenditures (7,500) (7,500) 0 0 0 0 0 0 0 0 0
Less Increase in Net Working Capital (666) (1,006) (67) (70) (72) (75) (78) (81) (85) (88)
Free Cash Flows (000 omitted) (7,500) (8,470) 3,263 4,220 4,221 4,207 4,176 4,125 4,054 3,959 3,839

NPV (no recovery in year 10) \$5,687 (000 ommited)
IRR (no recovery in year 10) 17.6%

Year 1 2 3 4 5 6 7 8 9 10
NWC Recovery 0 0 0 0 0 0 0 0 0 \$2,288
Sale of Facility at Book Value 0 0 0 0 0 0 0 0 0 \$10,000

NPV with Year 10 Recovery \$10,425 (000 ommited) (7,500) (8,470) 3,263 4,220 4,221 4,207 4,176 4,125 4,054 3,959 16,127
IRR with Year 10 Recovery 21.2%

Net Profit (Operating Profit – Interest) (000 ommited) (2,004) 2,569 2,587 2,591 2,579 2,551 2,503 2,435 2,344 2,227
Net Profit/Net Revenue -28.8% 14.7% 14.2% 13.7% 13.1% 12.5% 11.8% 11.0% 10.2% 9.3%

1

2

3

 Results-No NWC Recovery Year 1 Utilization Annual Increase in Utilization 10.0% Full-Time Employees/Census 5,487 \$38,500 20,666 23,246 24,176 1,617 Free Cash Flows Calculation Q3a The analysis above is identical to the one on the Q1 tab. Do a sensitivity analysis by systematically changing certain assumptions in the spreadsheet above: change the K-wacc to 8.3% change year 2 utilization to 45% change commercial payers to 30% of patient mix Use the answer box to prepare a summary of the original (Q1) results and the revised (Q3) results, i.e., a summary table. Q3b Revise the decision you made in Q1 based on the above sensitivity analysis, comparing Mulroney’s assumptions and the sensitivity analysis assumptions to expectations stated in the case. Be sure to consider both ‘hard quantitative data” from decision metrics and ‘soft qualitative information’ from the case.

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