The hospital in the previous question did some additional thinking about the proposed project. It...
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The hospital in the previous question did some additional thinking about the proposed project. It is several miles from the hospital's location and expects that the clinic will attract new patients. However, some board members pointed out that there might be some substitution. That is, some patients who previously went to the hospital's on-site clinic will now choose to go to the new clinic. Initial estimates are that perhaps 1,000 visits will be shifted from the on-site clinic to the new clinic. Visits at the on-site clinic are reimbursed at $160 per visit.
Does this possible shift need to taken into account in the cash flow modeling? If yes, what is the new NPV for the proposed clinic?
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