You are examining a proposal for a new business opportunity-a new procedure for which demand is expected to be 1,400 units the first year, growing by 600 units a year thereafter. You are able to perform 2,400 units per year. The price charged per procedure is $1,000. The collection rate is anticipated to be 80%. Each procedure consumes $300 of supplies. Salary cost is estimated to cost $600,000 each year, fringe benefits are 25% of salaries, office supplies not associated with the procedure are $1,000 per month and rent for the facility is $88,000 a year.
Question: Develop a marginal profit and loss statement for this business opportunity.
Based on that analysis, should this opportunity be pursued?