What is the ICER?
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The following information has been gathered on the costs and effectiveness of the two treatments, A and B. In this problem, costs and consequences are not discounted.
|
Treatment A |
Treatment B |
Mortality rate |
2% |
5% |
Life expectancy for survivors |
20 years |
10 years |
Initial treatment cost |
$10,000 |
$3,000 |
Follow up costs, year 1 |
$5,000 |
$1,000 |
Annual follow up costs, all subsequent years |
$1,000 |
$500 |
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- Assume you currently work for the city of Edmonton in their traffic safety department. It is estimated that you could reduce fatality risk by 3% at a particular intersection if you upgrade the traffic lights to use new high visibility LEDs. The cost of this upgrade is estimated to be $400,000. If we assume a human life is worth 10 million, should you spend the money to upgrade the traffic lights? (Hint: to multiply 1% by 200 you follow this process: 0.01 x 200 = 2). a No, since the expected benefit ($300,000) is lower than the cost. b Yes, since the expected benefit ($400,000) is equal to the cost. c Yes, since the expected benefit ($200,000) is greater than the cost. d No, since the expected benefit ($100,000) is lower than the cost.A privately run, for-profit, prison is considering ways in which it can cut its monthly costs and therefore increase profit. One idea it is considering is to pay a judge to guarantee convicted prisoners in poor health win their appeals and are set free. The prison believes it can realize the monthly cost savings below over the initial year of the plan. What is the present value of the first year's monthly cost savings? My answer is suppose to come up with 49701. This is the third time I have sent this problem threw I need to be credited for the other two times. I am waisting my questions by having to resubmit the questions 2 to 3 times. Please help thanks!! Month Savings ($) 1 3,500 2 6,000 3 6,500 4 9,000 5 9,000 6 9,000 7 9,400 8 9,800 9 4,800 10 5,000 11 2,000 12 3,500 Total 77,500View Policies Current Attempt in Progress A hospital is considering purchasing a new medical dispensing cabinet that will cost $290,000. It believes that this cabinet will reduce the amount of labor required to track and administer medications and will also result in fewer expired medicines. It estimates the medical dispensing cabinet will result in a savings of $34,000 at the end of year one and that the savings will increase by $8,000 per year for each of the 8 years that the machine will be used. What is the IRR of this investment? Click here to access the TVM Factor Table calculator. % Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is ±0.3. If the hospital's MARR is 12%, should they invest in this cabinet?
- The city of Bloomington is deciding if they are going to be able to justify an additional street light. The cost of the light to install is $14,000. City officials believe it will reduce the death rate at that intersection from 1.0% to 0.6%. Our guideline for valuing human life is $8M per person. What is the net of this cost benefit proposal? A. 32,000 B. 18,000 C. (18,000) D. (32,000)Letang Industrial Systems Company (LSC) is trying to decide between two different conveyor belt systems. System A costs $325,000, has a four-year life, and requires $121,000 in pretax annual operating costs. System B costs $405,000, has a sle-year life. and requires $115,000 in pretax annual operating costs. Suppose the company always needs a conveyor belt system when one wears out, it must be replaced. Assume the tax rate is 22 percent and the discount rate is 11 percent Calculate the EAC for both conveyor belt systems. (A negative answer should be Indicated by a minus sign. Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) System A System D 11:36 AM/The hospital is considering the purchase of imaging equipment worth $25,000 to improve its visual capture results, and improve outcomes. The operating costs will be reduced by $7,000 per year. The computer has an estimated life expectancy of 5 years, and an estimated salvage value of $5,000. What is the profitability index if the discount rate is 8%. Ignore reimbursement considerations.
- In this part of the project, you will be purchasing the home you chose in the Budget Project. You will need to obtain a loan from a financial institution since you cannot pay cash for your home. You will be researching three different loan scenarios and determining which loan option best fits your situation and needs. Purchase price of the home you chose from the Budget Project: ________$431,873______ Part 1: Financing your home Loan Scenario 1: In this scenario, your financial institution is offering you a 30-year fixed mortgage with a 20% down payment at a 3.43% fixed rate. Determine the following: Calculate the down payment for this loan. How much will you need to finance from the bank for this loan? What is your monthly payment? Use technology or the monthly payment formula in your text to get the monthly payment for this loan. What is the total cost of the loan over 30 years? How much of this cost is interest? What is the total you will expect to pay at closing for this loan…Ten physicians have just completed their residencies in internal medicine and are considering opening a group practice. They estimate the practice would have the following annual cost structure: You must show your calculation to receive credit. Annual fixed costs Variable cost per visit $750,000 $ 50 If volume in the first year is estimated to be 10,000 visits, what price per visit must be set if the practice wants to make an annual profit of $160,000?Tippy Toe Spa Company offers various services, such facials, laser hair removal and microdermabrasion. Currently, the company is considering purchasing the following spa equipment: Laser Hair Removal Machines Microdermabrasion Machines Facial Oxygen Units $64,500 $27,000 $126,400 $37,800 $91,400 $27,200 11% Cost per Machine Annual Cash Inflow Annual Cash Outflow Required Rate of Return Useful Life Residual Value 4 years $890 $29,700 $212,200 $197,900 14% 3 years $890 Laser Hair Removal Machine: Answer Years Microdermabrasion Machine: Answer Years Facial Oxygen Unit: Answer Years 7% Assume that each equipment's annual cash flow will occur for the period equal to its useful life. Do not enter dollar signs or commas in the input boxes. Use the present values tables in the textbook appendix. Use the negative sign for negative values. Round your answers to the nearest whole number. a) Determine the NPV of each piece of equipment. Laser Hair Removal Machine: $Answer Microdermabrasion…
- Vancouver Shakespearean Theater's board of directors is considering the replacement of the theater's lighting system. The old system requires two people to operate it, but the new system would require only a single operator. The new lighting system will cost $115,700 and save the theater $24,000 annually for the next eight years. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Exercise 16-28 New Present Value with Different Discount Rates (Section 1) (LO 16-1) Required: 1-a. Prepare a table showing the proposed lighting system's net present value for each of the following discount rates: 8 percent, 10 percent, 12 percent, 14 percent, and 16 percent. 1-b. Based on your findings in requirement 1-a., Which statement is true? Complete this question by entering your answers in the tabs below. Req 1A Prepare a table showing the proposed lighting system's net present value for each of the following discount rates: 8 percent, 10 percent, 12 percent, 14…4. A Taxi company is considering the following 4 cars for their limo service. All alternatives need to be replaced after 6 years. Consider a MARR of 9%. Cost Yearly Benefit Alternative 1 $65,000 $16,300 Alternative 2 $55,000 $15,100 Alternative 3 $25,000 $5.200 Alternative 4 $80,000 $21,300 Determine the following the best alternative based on the following analyses: a) Discounted payback period b) Future worth c) Benefit-Cost ratioA client is considering replacing his heating system in an office building. Two systems are being considered. System A has higher initial costs but lower recurring costs. System B has lower initial costs but higher recurring costs. The client expects that this office building would be re-constructed 18 years later. The discount rate to be used is 10%. System A System B Initial costs $500,000 $250,000 Recurring costs Minor repairs 5,000 per annum 8,000 per annum Fuel 20,000 per annum 25,000 per annum Major repairs 35,000 every 10 years 30,000 every 5 years Please conduct a cost-in-use study of the above two systems covering both initial and recurring costs until 18 years after replacing and advise which of the above methods is the more economical option for the client. (Please copy and paste the following answer format in your answer box and use it to put in your answers) System A…