Description
Please write 4 paragraphs using 3 scholarly peer reviewed sources on the following:
Some healthcare businesses, particularly not-for-profit providers, have the goal of producing social services along with commercial services. For such firms, the proper analysis of proposed projects must systematically consider the social value of a project along with its pure financial, or cash flow, value. When social value is considered, the total net present value (TNPV) of a project can be expressed as follows: TNPV = NPV + NPSV. Describe the net present social value (NPSV) Model of capital budgeting.
Explanation & Answer
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Net Present Social Value
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Net Present Social Value
Healthcare organizations, especially not-for-profit providers, have the objectives of
offering commercial services along with social services. For such businesses, the proper analysis
of proposed programs should, at least theoretically, systematically focus on the social value of
the plan along with its cash flow or pure financial value. The total net present value of a program
can be shown as TNPV=NPV+NPSV. In this formula, NPV represents the convectional NPV of
the program's cash flows, while NPSV is its net present social value (Gudz, 2015). NPSV
represents the assessment of managers of the social value of the program. It also differentiates
the capital budget in investor-owned businesses from that in not-for-profit businesses. The
project is only approved when its TNPV is or equal to zero. This implies that the sum of the
project's social and financial value should not be below zero.
NPSV is explained as the sum of the present value of every year's social value. In other
words, NPSV is based on the idea that the total value of a program is equal to the sum of its
economic and social values. In that case, the present value of the future yearly social values is
summed to the NPV to determine the project's total value. Notably, the finance capital provider
to the not-for-profit organization does not obtain a cash return on their funds. Alternativel...
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