For Friady 22/2013 1 answer below »

This a finantialroject analysis of a Medical stent products. please see word document attached with the explanation. There are 2 Excel sheets attached as a samples of excel spread sheet. They don’t have to be exactly or changing numbers on it is just a guideline of a Excel spread sheet.

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1. For this basic scenario, calculate the project s cash flows, WACC, NPV, IRR, Payback Period, Profitability Index, Discounted Payback, and MIRR. Graph an NPV profile. Evaluate whether the project should be undertaken.

2. For this more advanced scenario, calculate the project s cash flows, NPV, IRR and MIRR.

3. Risk analysis:

Perform a sensitivity analysis for NPV for the more advanced cash flow case. Graph on the same axes the NPV for 5%, 10%, 15% and 20% deviations from the base case for the parameters: initial size of cardiac stenting market, Year 5 ultimate percent market share for cardiac stents, initial market size for carotid stents, materials cost per unit, and selling price.

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Scientific’s Stent

Scientific (KS), a regional manufacturer and developer of healthcare devices, is considering licensing the rights to manufacture and distribute a new drug eluting stent, tentatively named the VolStent, for use in coronary and carotid arteries. The VolStent improves upon both bare and current generation drug eluting stents with its ease of insertion, superior radio-opacity and visibility during imaging, and statistically significantly reduced restenosis rates. The stents have passed clinical trials, are FDA approved, and it is only a matter of licensing the intellectual property rights and setting up manufacturing facilities in order to produce, market and sell the VolStent.

The percutaneous coronary intervention market is large, with 600,000 PCIs per year and 900,000 stents placed per year in the U.S. alone. Of these, about 71% are placed during an emergency while the remaining 29% are placed in non-acute cases either as a result of chest pain associated with stable heart disease, or in asymptomatic patients as a result of screening. A recent study found that roughly half of the non-acute PCIs were either entirely inappropriate or of uncertain benefit relative to medical management, and at an average PCI cost of over $20,000, it is likely that the number of stents placed in non-acute cases will shrink under health care reforms. Scientific’s analysts predict that the non-acute use of stents will decline by a total of 30% over the next five years while the acute use will remain constant. The analysts also predict that Scientific can initially capture 5% of the U.S. stenting market with this percentage increasing to 25% in the 5th year.

The market for stenting in carotid stenosis is smaller and more variable. The benefits of stenting over endarterectomy have been questioned over the years, leading to uncertainty in the size of the future market for stents in treating carotid stenosis. Roughly 140,000 endarterectomies are performed each year in…

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