1. Which bank should Gary choose for a saving account, which bank for a certificate of deposit, and which bank for a term loan?

2. Gary will invest the donations from a wealthy investor in CDs. How much will the Center have accumulated on the day of the last donation? (Use the CD interest rate offered by the bank you selected for a CD in question 1.)

3. If the Center takes out a 5-year term loan that would be repaid in equal annual installments, how much will it owe to BankSouth if Gary decides to pay off the loan early, at the end of the third year? (Use the term loan interest rate offered by the bank you selected for a term loan in question 1.)

4. If the Center takes out a 7-year term loan that would be repaid in different annual installments (with the first payment due at the end of year one), how much would the fixed annual installment be at the end of each year from Year 4 through Year 7? (Use the term loan interest rate offered by the bank you selected for a term loan in question 1.)

GULF SHORE S S URGERY CEN TERS TIME VALUE ANALYSIS GARY HUDSON was born and raised in Pensacola, Florida. He obtained his bachelors degree in business from Florida State Uni versity, where he enrolled in the NROTC (Naval Reserve Officers Training Corps) program. After graduation, he received a commission in the US Marine Corps. Following his release from active duty, Gary used his GI Bill benefits to obtain a masters degree in health services administration from the University of Florida. His first job in health care was as a special projects coordinator/financial analyst at a large Miami hospital. He enjoyed his work there, but his ultimate goal was to return to Pensacola as the manager of a smaller healthcare business, where he would have more responsibility and authority. After five years in Miami, Gary became the chief operating and financial officer of Gulf Shores Surgery Centers, an investor-owned chain of ambulatory surgery centers with six locations in Florida's Panhandle. Immediately after assuming his new position, Gary found himself facing several decisions. First, Gary had to select a bank or banks to meet the financial needs of Gulf Shores. He has approached two local banks -- Sun Trust and BankSouthabout the interest rates they offer on a savings account and a certificate of deposit (CD) as well as the rate charged on a term loan (Exhibit 12.1). Second, a wealthy patient was so impressed with the care she received at Gulf Shores that she decided to make a series of donations to the facility. She will donate $75,000 a year for the first six years (t = 1 through t= 6, where t= time) and $150000 annually for the fol lowing six years (t=7 throught = 12). The first deposit will be made a 93