The newborn nursery would be staffed to handle 12 infants on a full-time basis.

Question

The newborn nursery would be staffed to handle 12 infants on a full-time basis. The parents of each infant would be charged $204 weekly, and the facility would operate 52 weeks of the year. Staffing the nursery would require two full-time specialists and five part-time assistants at an annual cost of $103,082. Food, diapers, and other miscellaneous supplies are expected to total $14,003 annually.

Determine the following: (Round all answers to 0 decimal places, e.g. 2,250 unless otherwise indicated.)

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Annual Income = 204*12*52 - 25656/5 - 103082 - 14003 = 5079.80 or 5080.

Part B:

Cash Flows = 5080 + 25656/5 = 10211

Part C:

Annual Rate of Return = 5080/25656*100 = 19.80 or 20%

Part D:

Payback Period = 25656/10211 = 2.51 years

Part E:

NPV = - 25656 + 10211/(1+.10)^1 + 10211/(1+.10)^2 + 10211/(1+.10)^3 + 10211/(1+.10)^4 + 10211/(1+.10)^5 = 13051.72 or 13052.

Thanks.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.