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Problem 16-41 Student Name:
Class:
Enter appropriate data in the yellow cells. An asterisk (*) to the right indicates an incorrect amount. Answers should be entered as whole numbers not formulas.
Time 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Contract with Diagnostic
Testing Services
Flat Fee * * * * * * * * * *
Per-specimen charges * * * * * * * * * *
Loss Contribution Margin on Referred Cases * * * * * * * * * *
Total Cash Flow * * * * * * * * * *
Discount Factor * * * * * * * * * *
Present Value * * * * * * * * * *
Net Present Value *
Time 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Establish In-House
Testing Lab
Rental of storage space * * * * * * * * * *
Equipment * *
Staff * * * * * * * * * *
Fixed operating costs * * * * * * * * * *
Variable operating costs * * * * * * * * * *
Fees for lab services * * * * * * * * * *
Total Cash Flow * * * * * * * * * * *
Discount Factor * * * * * * * * * * *
Present Value * * * * * * * * * * *
Net Present Value *
Difference in NPV:
Contract with Diagnostic Testing Services (3,277,580)
Establish In-House Testing Lab (3,245,730)
Difference (31,850)
Which alternative should be chosen? In-House Lab
Problem 16-41 Student Name:
Class:
Enter appropriate data in the yellow cells. An asterisk (*) to the right indicates an incorrect amount. Answers should be entered as whole numbers not formulas.
Time 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Contract with Diagnostic
Testing Services
Flat Fee (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$
Per-specimen charges (400,000) (400,000) (400,000) (400,000) (400,000) (400,000) (400,000) (400,000) (400,000) (400,000)
Time 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Establish In-House
Testing Lab
Rental of storage space (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$
Problem 16-41 Student Name:
Class:
Enter appropriate data in the yellow cells. An asterisk (*) to the right indicates an incorrect amount. Answers should be entered as whole numbers not formulas.
Time 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Contract with Diagnostic
Testing Services
Flat Fee (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$ (80,000)$
Time 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Establish In-House
Testing Lab
Rental of storage space (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$ (30,000)$
Equipment (625,000)$ (300,000)
