As the IT Manager at Googolplex, you are always searching for new technology that can reduce the cost of managing patient care while also increasing the
quality of care. During staff meetings, medical experts have advised that monitoring members’ overall health is key to early intervention on changes to
members’ health. It is through early intervention that significant savings to the company can be achieved. The CEO and Chief Medical Officer have identified
that the Internet of Things (IoT) technology in the form of wearable devices could save and earn the company millions of dollars with the continuous
monitoring of high-risk members. IoT technology is defined as devices and systems that are integrated through the Internet, thereby enabling monitoring and
data trend analysis. IoT-enabled wearable heart rate monitors, for instance, can help the company identify risk factors sooner to allow for preventative
interventions or treatments.
You have been asked to evaluate financing scenarios that allow members to receive a free IoT wearable medical monitor. Based on the current conditions, it
is expected that Googolplex will have new annual revenues of $25,000,000 if they invest in and distribute new wearables devices to members. All analysis
thus far has taken place at 10% per year. However, the firm has received information from other corporations that have shown a 25% average return per year
on the initial investment of $100,000,000 for comparable medical monitor investments when market conditions are normal. Yet, the same companies report
a significant impact on the variability of returns per year based on changes to market risk due to supply-chain dependencies on foreign manufacturers. When
the market risk is high, the average initial investment return was 0% per year; when market risk is low, the average initial investment return was 50%.
Determine the number of years required to generate 10%, 25%, and 50% returns on a $100,000,000 initial investment for the new wearable devices under each
of the market risk conditions: average market risk, low market risk, and high market risk. Assume market risk condition (average, low, or high) is constant for
the specified evaluation period of 10-years.
Knowing that there are many risks associated with deploying new technology, conduct a sensitivity analysis that shows the variability of potential returns on
investment. Consider and describe potential market risks, interest rate changes, cost of future wearable device research, and product acquisition under
varying economic and non-economic conditions.
Your deliverable is to develop a presentation for the CEO and Chief Medical Officer that is based on sensitivity analysis to show the variable costs and risks
associated with investing in and deploying the IoT wearable devices