Michigan Home Health is considering opening an office in a new market. The organization hasidentified the number of home...
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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 |
Construct a graph to show the sensitivity of the new office NPV to each variable. |