Michigan Home Health is considering opening an office in a new market. The organization has identified the number of home visits, revenue per home visit, and the level of fixed costs of the new office as being the major sources of uncertainty in the investment decision. To get a better understanding of the sensitivity of the new office NPV to these variables, the following data have been assembled:
|
Change
|
|
NPV
|
|
|
from
|
Number
|
Revenue
|
Level of
|
|
base
|
of home
|
per home
|
fixed
|
|
case
|
visits
|
visit
|
costs
|
|
-30%
|
-$814
|
-$57
|
$82
|
|
-20%
|
-$515
|
-$11
|
$82
|
|
-10%
|
-$216
|
$36
|
$82
|
|
0%
|
$82
|
$82
|
$82
|
|
10%
|
$381
|
$129
|
$82
|
|
20%
|
$680
|
$176
|
$82
|
|
30%
|
$979
|
$222
|
$82
|