Reference no: EM131500134

You are examining a proposal for a new business opportunity. A new procedure can be offered at a price of $1,400. The collection rate is expected to be 82%. Demand is anticipated to be 800 units in year one, growing by 200 units each year thereafter until it plateaus at 1,600 visits annually. Each procedure consumes $300 of supplies. Salaries are estimated to cost $600,000 each year plus an additional 25% for fringe benefits. Fixed operating costs are $10,000 per month and annual rent is $20,000/year. Develop a marginal P&L for this business opportunity. Based on that P&L, would you pursue this opportunity?