Given the following information, determine the feasibility of this investment. Veronika has a great idea for a new online game for mobile devices. The game allows players to destroy alien invaders, which is nothing new, but it also serves as a social engagement app that will allow gamers to connect with other gamers that share their interest, similar to existing dating services. By combining game playing with dating, she thinks she can reach a new market, but she fully expects that others will copy her. Therefore, she assumes that this is a limited time opportunity. Veronika estimates that it will cost about $175,000 to hire a game engineering contractor to build the app. Once it is built, the engineering firm will receive $0.18 per download as a royalty. The cloud hosting platform firm will charge them $0.12 per month per active user. Veronika will have to spend $25,000 each of the first two years to market the game. She projects that the game will probably last only about four years, with downloads and users dropping off after the first two years. There will be no salvage costs (terminal value) after the end of the four years. Downloading the app will cost users $1.99 as a one-time fee. In addition to the revenue from the downloads, she expects to earn about $0.78 per month per active user in advertising and promotion revenue. Her annual projections for downloads and average monthly users are shown below. Year Downloads 1) 250,000 2) 150,000 3) 60,000 4) 30,000 Avg Monthly Users 1) 18,750 2) 22,000 3) 12,000 4) 8,000

She also expects to incur $240,000 per year in other operating costs the first year, but that amount should decrease to $200,000 in the second year and then down to $100,000 per year in years three and four. The $175,000 of development costs are amortized for tax purposes for three years under a special tax incentive law. She can claim 60 percent of the development cost in Year 1, 35 percent in year 2, and the final 5 percent in year 3. The cost of capital to discount the future cash flows is 15 percent, and the average tax rate is 30 percent.

Create a spreadsheet to compute the NPV, IRR, PI, and Payback for this project and interpret the results. You will have to calculate the initial investment at time zero and the after-tax operating cash flows for Years 1 through 4 to calculate the NPV, IRR, PI, and Payback. Remember to convert "monthly" into "annual" when computing revenue and expense per year. After computing the relevant financial metrics, make a recommendation to Veronika and justify that recommendation by citing the information you have generated in your spreadsheet.

VacuTech is a high-technology company that manufactures sophisticated instruments for testing microcircuits. Each instrument sells for $3,500; variable manufacturing cost per unit (all cash) equals $2,450. An essential component of the company’s manufacturing process is a sealed vacuum chamber where the interior approaches a pure vacuum. The technology of the vacuum pumps that the firm uses to prepare its chamber for sealing has been changing rapidly. On June 1, 2015, VacuTech bought the latest in electronic high-speed vacuum pumps that can evacuate a chamber for sealing in only 6 hours. The company paid $400,000 for the pump. Recently, the pump’s manufacturer approached VacuTech with a new pump that would reduce the evacuation time to 2 hours. VacuTech’s management is considering the purchase of this new pump and has asked Doreen Harris, the company controller, to evaluate the financial impact of replacing the existing pump with the new model. Doreen has gathered the following information prior to preparing her analysis: The new pump could be installed and placed in service on January 1, 2019. The pump’s cost is $608,000; installing, testing, and debugging the machine will cost $12,000 (which should be capitalized). The pump would be assigned to the 3-year class for depreciation under the Modified Accelerated Cost Recovery System (MACRS) and is expected to have an $80,000 salvage value when it is sold at the end of 4 years. Depreciation on the equipment would be recognized starting in 2019, and MACRS rates (rounded) would be as follows: Year 1 33 % Year 2 45 Year 3 15 Year 4 7 The current pump is being depreciated under MACRS and will be fully depreciated by the time the new pump is placed in service. If the firm purchases the new pump, it will sell the current pump for a net price of $50,000. At the current rate of production, the new pump’s greater efficiency will result in annual pretax cash savings of $125,000. VacuTech is able to sell all testing instruments that it can produce. Because of the new pump’s increased speed, output is expected to increase by 30 units in 2019, 50 units in both 2020 and 2021, and 70 units in 2022. Cash-based manufacturing costs for all additional units would be reduced by $150 per unit (in addition to the $125,000 savings noted above). VacuTech is subject to a 40% income tax rate. For evaluating capital investment proposals, management assumes that annual cash flows occur at the end of the year and uses a 15% after-tax discount rate.

1. Calculate the net present value (NPV) at January 1, 2019, of the estimated after-tax cash flows that would result from its acquisition. (Use the built-in NPV function in Excel to estimate the NPV of the proposed investment.)

Economics classes typically focus on the simplest type of market, “perfect competition,” because that is the simplest analysis to teach and perhaps because it is the easiest to understand. But no markets are really perfect and the healthcare industry is no different. All markets stray from perfection to various degrees and a better description of most real-world markets is a more complex model called monopolistic competition. (Pettinger, 2018) The main difference is that in this model, competitors differentiate their products so that they aren’t selling perfect substitutes with numerous other competitors. That allows each firm to raise prices above their marginal costs, and it also encourages excessive investment in fixed costs which raises overall costs and results in inefficient scale (excessive capacity). This describes the hospital and healthcare industry well. (Hilsenrath, 1991) There is no price competition for any customer because emergencies often dictate and necessitate the geographic accessibility for help. People seek aid without price competition. It is doubtful that someone having a heart attack will negotiate the price of their treatment mid attack, much less transfer to a cheaper competitor several miles away. However, this is kept in check by government oversite and regulations and if it were not, the hospitals would keep raising their prices encouraging additional hospitals to be built. This would translate into excessive overcapacity and the need to raise prices to cover the fixed costs of maintaining so many hospitals and staff that mostly sit idle waiting for patients. (Hilsenrath, 1991). Healthcare seems to also demonstrate some form of Monopolistic competition and not a true Monopoly. In a monopoly, entry into the sector is restricted and exit is also highly regulated as government regulations dictate everything from staffing ratios to acceptable infection rates. Yet the healthcare products are unique and public utility have to be taken into consideration. Of note, profit is reduced (regulated) by the government. This is slightly different in a monopolistic competition and the healthcare industry seems to adopt this. In this competition, there is slight product differentiation (stroke centers vs. a children’s hospital) this is necessary otherwise the “product” is easily replaceable and beatable in the market. Because there are few sellers but less than oligopoly, Product differentiation is relatively easy to do and “product” differentiation can drive market share and resultant profits. So, what opportunities exist in a monopolistic competition for a hospital? As mentioned, if there is excess capacity in a hospital, the equilibrium quantity is smaller than the lowest cost quantity at the minimum point on the average cost curve. The hospital could provide care at a lower cost by increasing services to the level where average costs are minimized. This could be effective provided the government loosened some of its over site instead of micromanaging medicine. The government has yet to figure out the regulations cause a higher than marginal cost pricing (P> MC).

What can be done differently?

A 57 year-old male with history of HTN and HLP presents to your office with complaints of transient chest pain during exertion. He denies associated nausea, diaphoresis however does complain of increase shortness of breath and dyspnea on exertion. His chest pain is substernal and does not radiate and seems to alleviate after 5-10 minutes with rest. The last occurrence of pain was one week ago. Pt denies palpitations, near syncope or syncopal episodes.

1. How would you classify the patients symptoms? Support your answer and differentiate this from other presentations.

2. What would you order for this patient? Explain your reasoning.

The patient returns two days later prior to his outpatient testing and states that his chest pain had returned however now it is independent of exertion, is associated with diaphoresis, radiates to his jaw and continues to have shortness of breath.

3. Explain the pathophysiology of this progression of symptoms.