Ambulatory Surgical Center at Newton Community Hospital Case Analysis

Task summary:

There are two parts to the assignment. Part 1: Using the Excel worksheet template provided calculate the NPV and the Contribution Margin using the data provided in the case. Everything needs to be filled in inside the xls.

Part 2: A document for responding to the case questions based on the Excel calculations and the information in the case.

1) Apply the theories of marginal analysis for project evaluation

2) Make realistic assumptions about future Income from Operations and cost in preparation fordiscounted cash flow analysis (DCF).

3) Perform DCF analysis by calculating the net present value based on future free cash flowestimates.

4) Perform scenario analysis based on a varying one of the key assumptions.

5) Use a Spreadsheet tool for DCF analysisYou must construct a well-organized integrated report . The quality ofthe entire paper will be graded. A lack of analytical integration will result in a reduction in theoverall grade.There are two parts to the assignment

.Part 1: Using the Excel worksheet template provided calculate the NPV and the ContributionMargin using the data provided in the case.

Part 2: A document for responding to the case questions based on the Excel calculations and the information in the case.

1) Using the data provided in this case, fill in the Excel worksheet template provided with this assignment.

2) Calculate the Net Present Value.

3) Respond to Mr. Cruz’s question, “Does Newton Community have sufficient cash balances to cover the forecast risks in the initial three years before ASC operations reach full capacity?” Note, the data used for the NPV analysis are estimates. Therefore, your answer should incorporate the risk associated with forecasting errors.

4) Is the trend in contribution margin a source of concern for the team? Explain why.

5) Based on your analysis offer your recommendation of whether NewtownCommunity Hospital would rationally invest in the ASC.

6) Respond to Mr. Cruz’s question, “What crucial assumption if altered, could change the outcome of the analysis”, by a) identifying one crucial assumption underlying the analysis, b) changing that assumption to a more realistic value and c) recalculating the Net Present Value based on the altered assumption.

Net Present Value Analysis for Building & Operating an ASC
Discount Rate
Year
Investment
Cash In
Income
Terminal Value
Cash Inflow
Fixed Cost
Itemize Fixed Cost
Itemize Fixed Cost
Itemize Fixed Cost
Total Fixed Cost
Variable Cost
Itemize Variable Cost
Itemize Variable Cost
Itemize Variable Cost
Total Variable Cost
Cash Outlfow
Net Contribution (%)
Net Cash Flow
Discount Factor
PV
NPV
6%
0
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Use this Workbook format based on details
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k format based on details provided in the case.
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