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Health care: Decisions prior to investment

a). What types of decisions would need to be made before the investment is made? Indicate the main kinds of information/data needed to evaluate this capital investment project.

b). Consider a health care organization with which you are familiar with and present one or two challenges that are likely to arise during this decision-making process, as well as possible solutions.

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a). What types of decisions would need to be made before the investment is made? Indicate the main kinds of information/data needed to evaluate this capital investment project.

Before you can decide on a capital investment, you must first figure out:
1. The initial cash outlay. This includes the invoice price of the item to be obtained, costs to ship, cost to install and test, legal fees, commissions or cost to reorganize the facility to accept the new item.
2. Proceeds from selling off old item (replacement) or salvage items from old process that is stopped due to this investment. This amount reduces initial cash outlay (typically) since it usually occurs when the new item is installed.
3. The expected future cash flows. This includes new transactions with customers (inflows) and new costs (outflows) that change because the investment was made. Ignore items that would have occurred whether you invested in the new opportunity or now.
4. The expected average tax rates over the life of the investment.
5. The expected tax depreciation of the ...

Solution Summary

Your tutorial is 565 words plus two references and gives nine items that you would need to consider prior to making a capital investment and tells of special challenges in healthcare settings.

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