Question
Assignment Exercise 14-2: Cumulative Inflation Factor for Comparable Data (20 Marks) Review Table 14-3 and the accompanying text. Assumptions Two hospitals report their annual projected
Assignment Exercise 14-2: Cumulative Inflation Factor for Comparable Data (20 Marks)
Review Table 14-3 and the accompanying text.
Assumptions
Two hospitals report their annual projected revenue for five years to the local newspaper for a story on the areas future economic outlook. However, Hospital One has applied a cumulative inflation factor of five percent per year while Hospital Two has not applied any inflation factor. Thus the information is not properly comparable.
Projected Revenue | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
Hospital 1 | $20,000,000 | $22,500,000 | $27,500,000 | $27,500,000 | $30,000,000 |
Hospital 2 | $20,000,000 | $21,000,000 | $25,000,000 | $24,000,000 | $26,000,000 |
Required
Revise Hospital 2s projections by applying a cumulative inflation factor of five percent per year.
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