Ambulatory Surgery Center Case Summary

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The purpose of this case study is to hypothetically conduct a complete project analysis on the ambulatory surgery center and to present my findings and recommendations.
1) Complete Table 1 by adding the cash flows for Years 4 and 5.
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2) You provided us with the NPV and IRR. These values are $1,376,564 and 14.0%, respectively. The purpose of NPV is the assist in determining if a new project will be financially viable or not. Because the NPV value is positive, then it is expected to produce more income than what could be gained by earning the discount rate. Thus, meaning this project should be undertaken. Commonly, the internal rate of return (IRR) is also utilized to compare projects and decide which is more financially beneficial. In this case, the IRR and the NPV can be employed to ensure that adding the proposed ambulatory surgery center would be worth the …show more content…

The hospital might benefit because the demand for outpatient surgeries will be higher, but this could still mean the inpatient surgeries could have an adverse financial impact. However, if the local physicians had opened their facility, then we would need to assess the analysis as to which physicians were cannibalizing the most of our business. Thus, It is important to look at both how much each cannibalization is occurring as well as the losses and how they are related to the hospital as a whole.
5) Expected NPV is $1,376,536. This positive NPV shows you that you have income coming in and that it is safe to undertake the project. The worst shows you what to expect at the very worst if upon taking up the new project, and it fails to be financially successful. You can use this method to argue for or against taking up a new project. Since our goal is to increases owner wealth, NPV is a useful measure in determining how well the project will meet this

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