12-1 Using the information in Table 12-7, construct a PERT network and answer
each of the following questions:
a. What is the expected project completion data?
b. What is the scheduled start and completion date for each activity?
c. Which activities are on the critical path?
d. How long can noncritical path activities be delayed without jeopardizing
the overall completion date for this project?
12-2 Assess the impact of the following changes to the time estimates provided
in question 12-1. Individually, what is the impact if:
Activity Predecessor New Time Estimate
O. Advertise for new staff N 4
P. Interview for new staff O 6
Q. Select new staff P 1
Collectively, what is the impact of these changes?
12-3 As project manager for the example included in question 12-1, what
would you recommend to preserve the original project completion date
if activity A was reestimated to take 8 weeks, not the original 4 weeks? Provide Details
Book used: Essentials of Applied Quantitative Methods for Health Services Managers (stiperdharmawacana.ac.id) Chapter 12
13-1 A representative of a reputable financial services company has approached
you as manager of a four-person group of anesthesiologists with an opportunity to purchase a 10-year annuity due for each member of the group.
The annuity due would pay $40,000 each year beginning 5 years from now
(i.e., at time 5 5). What is the most you would be willing to pay now, per
each physician, for this investment? Assume an appropriate discount rate
of 7%.
13-2 The hospital’s marketing and finance departments have just provided you, as
chief financial officer, with pro forma income statements for your proposed
sonogram center. These statements appear in the following.
Pro forma Income Statement
(000)
Time t 1 1 t 1 2 t 1 3 t 1 4
Service Revenues (net) $425 $500 $580 $700
Expenses $400 $450 $525 $600
Depreciation Expense $ 35 $ 35 $ 35 $ 35
Net Income ($ 10) $ 15 $ 20 $ 65
What is the project’s IRR? Assume an initial investment of $175,000 and an
appropriate discount rate of 6%. The hospital is operated as a not-for-profit
facility.
13-3 The chief operating officer (COO) of a small, not-for-profit community hospital has to make a recommendation to the board of trustees on choosing
among three project options for an unrestricted gift of $250,000 that has just
been received. The board has established a time horizon of 5 years on this
project. The options are described in the following.
a. Purchase a 5-year treasury note at an interest rate (annual) of 7%.
b. Purchase the practice of a young physician (the hospital’s third highest
admitter). Estimates of projected cash flows for the practice (postpurchase), are:
Probability of Cash Flow
Time 60% 20% 20%
t 1 1 $ 40,000 $20,000 $ 60,000
t 1 2 $ 60,000 $30,000 $ 80,000
t 1 3 $ 75,000 $40,000 $100,000
t 1 4 $100,000 $50,000 $125,000
t 1 5 $100,000 $50,000 $125,000
Exercises 269
270 Financial Evaluation of Projects
c. Purchase an upgraded analyzer for the laboratory. Based on forecasts of
laboratory utilization, the net cash flows for this project are:
Time Net Cash Flow
t 1 1 $75,000
t 1 2 $75,000
t 1 3 $50,000
t 1 4 $50,000
t 1 5 $50,000
Which investment should the COO recommend and why?
Book Used: Essentials of Applied Quantitative Methods for Health Services Managers (stiperdharmawacana.ac.id) Chapter 13
Last Completed Projects
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