BUS420 Individual Case Analysis on Health System
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages Description/Paper Instructions
BUS420 Individual Case Analysis on Health System
University of Virginia Health System
Please read the case distributed in class and write up a case report (maximum 3 pages, single spaced, excluding appendix) to answer the following questions:
- What are the issues in this case?
- The distinction between for-profits and nonprofits is profound when valuing new projects. For profit institutions have shareholders to answer to and therefore require a profit margin that covers borrowing costs plus the equity cost of capital. But nonprofit institutions do not pay taxes and do not have shareholders allowing them to accept projects with a lower margin.
- What are the nonfinancial drivers for adding an LTAC facility to the U.Va. Health System? What are potential reasons the board may not approve the project from a nonfinancial standpoint?
- Weighted-average cost of capital.
- Please use the WACC worksheet in the excel supplement file to facilitate your calculation. Make sure your cells contain formula that shows your calculation. Otherwise, please provide explanations about how you come up with the numbers.
- MRP is 6% and tax rate for for-profit comparable is 35%.
- Capital Budgeting Analysis.
- Please use the Cash Flow worksheet for your analysis. Please use the WACC you estimated in Q3 as your discount rate. All cash inflows should be entered as positive numbers and all cash outflows should be entered as negative numbers. Calculate the base case NPV and IRR with the assumptions given.
- Note: For the section “Other”– If you feel that there should be additional items included –please include them under this section. Otherwise, leave this section blank.
- For net working capital section, please use the receivable days/payable days/inventory days to back out the NWC level: e.g. Accounts Payable=COGS (supplies/drugs/foods) * payable days /365. You may want to do a textbook/internet search for the formulas of the other two.
- Which assumptions do you think will be of the most interest to the board of directors? Show the impact on NPV using sensitivity analysis by creating several data tables based on the drivers you identify.
- Conclusion: Combining the financial factors and non-financing factors, should Fitzgerald propose the LTAC project in the board meeting?
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Note:
- Please do not use Q&A format for your report; I recommend you to structure your report in the following way:
o Overview of the case
o Issues (address Q1 & Q2)
o WACC (Q3)
o Capital budgeting (Q4)
▪ Cashflow estimations
▪ Sensitivity
o Conclusion
- You should send me two files: the report AND the excel worksheet.
- Please send me all Excel Exhibits that support your analysis. Make sure all exhibits are properly labeled from Exhibit 1 to Exhibit X. In writing your report, make sure you refer to the Exhibits properly.
o Make sure your excel work book contains ALL formulas that you used in your calculation. Spreadsheet/cells without formulas will not receive credit.
- Your analysis report is due on April 30th @11:55pm via Sakai. The submission link is under Course Material – Individual Case Analysis—Case Submissions. No late submission will be accepted.