MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $17 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment outlay for the facility. Net cash inflows are expected to increase to $2.0 million in each of years 2 and 3; $2.5 million in year 4; and $3.0 million in each of years 5 through 10. The lease agreement for the facility will expire at the end of year 10, and MaxiCare expects the cost to close a facility will pretty much exhaust all cash proceeds from the disposal. Cost of capital for MaxiCare is estimated as 12%. Assume that all cash flows occur at year end.
What is the breakeven selling price for this investment, that is, the price that would yield an NPV of $0? (Use the Goal Seek function in Excel to determine the breakeven selling price.
Homework Answers
| Years | Net Cash Flow | NPV | |
| ($ in Million) | ($ in Million) | ||
| 0 | -17 | ||
| 1 | 0 | 0.893 | 0 |
| 2 | 2 | 0.797 | 1.594 |
| 3 | 2 | 0.712 | 1.424 |
| 4 | 2.5 | 0.636 | 1.59 |
| 5 | 3 | 0.567 | 1.701 |
| 6 | 3 | 0.507 | 1.521 |
| 7 | 3 | 0.452 | 1.356 |
| 8 | 3 | 0.404 | 1.212 |
| 9 | 3 | 0.361 | 1.083 |
| 10 | 3 | 0.322 | 0.966 |
| 12.447 | |||
Total Inflow =$12.447 M
Add Answer to:
MaxiCare Corporation, a not-for-profit organization, specializes
in health care for senior citizens. Management is considering
whether...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether...
MaxiCare Corporation, a not-for-profit organization, specializes
in health care for senior citizens. Management is considering
whether to expand operations by opening a new chain of care centers
in the inner city of large metropolitan areas. For a new facility,
initial cash outlays for lease, renovations, net working capital,
training, and other costs are expected to be about $24 million. The
corporation expects the cash inflows of each new facility in its
first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether...
MaxiCare Corporation, a not-for-profit organization, specializes
in health care for senior citizens. Management is considering
whether to expand operations by opening a new chain of care centers
in the inner city of large metropolitan areas. For a new facility,
initial cash outlays for lease, renovations, net working capital,
training, and other costs are expected to be about $14 million. The
corporation expects the cash inflows of each new facility in its
first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $17 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $12 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $16 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $20 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $26 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $16 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment...
Please help these answers are not correct MaxiCare Corporation, a not-for-profit organization, specializes in health care...
Please help these answers are
not correct
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $20 million. The corporation expects the cash inflows of each new facility in its first year...
Novo Nordisk A/S is a health care company engaging in the discovery, development, and manufacture of...
Novo Nordisk A/S is a health care company engaging in the discovery, development, and manufacture of pharmaceutical products. Its specialty is diabetes care and its headquarters are in Bagsvaerd, Denmark. The company sells its products all over the world, including in the United States, Japan, China, Russia, India, and Europe. As a new member of the capital budgeting division of Novo Nordisk A/S, you have been asked to determine the net cash flows and NPV of a proposed new diabetes...
MaxiCare Corporation, a not-for-profit organization, specializes
in health care for senior citizens. Management is considering
whether to expand operations by opening a new chain of care centers
in the inner city of large metropolitan areas. For a new facility,
initial cash outlays for lease, renovations, net working capital,
training, and other costs are expected to be about $24 million. The
corporation expects the cash inflows of each new facility in its
first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes
in health care for senior citizens. Management is considering
whether to expand operations by opening a new chain of care centers
in the inner city of large metropolitan areas. For a new facility,
initial cash outlays for lease, renovations, net working capital,
training, and other costs are expected to be about $14 million. The
corporation expects the cash inflows of each new facility in its
first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $17 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $12 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment...
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $16 million. The corporation expects the cash inflows of each new facility in its first year of operation to equal the initial investment...
Please help these answers are
not correct
MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $20 million. The corporation expects the cash inflows of each new facility in its first year...
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