Posted: May 5th, 2016

Determine the cash inflows and outflows for each year?

To address this problem, there is a proposal to implement a centralized nurse triage line, an off-site phone center that would be staffed by registered nurses with a multitude of specialties (including ER nurses, critical care, surgical, and even some nurse practitioners). These nurses are able to offer callers medical advice encompassing the treatment of fevers, wound care, and emergent conditions such as chest pain. The nurses are trained to triage conditions to the appropriate level of care be that at home, at an urgent care center, or at an emergency department.
The major cost impact is the increased salary requirement for the phone center staff, which will entail approximately 33 multi-discipline employees, based on workload and enrollment data. Additional elements of the proposal include hiring an IT specialist to manage the triage line’s computer system, and facility renovations. The main benefit of this proposal is projected cost reductions in patient care as a result of moving primary care out of the expensive emergency-room setting.

The Capital Case Study, Part 2 spreadsheet provides cash flow data (costs and benefits) for the proposal.
Use Excel spreadsheet to complete the following:

1. Determine the cash inflows and outflows for each year.
2. Evaluate the capital project by calculating the following metrics:
a. net present value (NPV)
b. internal rate of return (IRR)
c. modified internal rate of return (MIRR)
d. payback period
e. discounted payback period
3. Indicate whether the project is acceptable, assuming Jiranna has a corporate policy of not accepting projects that take more than 3.5 years to pay for themselves, and assuming an 11% cost of capital.