Problem
Outpatient Rehabilitation Services SUS Hospital is considering adding a service line: outpatient rehabilitation services. The cost to get the program up and running is $2,441,700 and the anticipated revenue stream for this project is $450,000 per year for the next 10 years.
• Estimation of the project's cash flows
• Assessment of risk
• Estimation of the cost of capital
• Determination of the project's profitability
• Compute the internal rate of return (IRR) and the net present value (NPV) for each project.
• Based strictly on the calculations, which projects should be accepted or rejected?
• What type of non-financial data should be considered for each project?