1. Coronary artery bypass grafting DRG price is $31,329. If hospital agreed with payment of $35,000 in 3 years, what was the annual interest rate?
2. Hospital has the following treatment options to reduce the incidence of Ventilator-Associated Pneumonia: For Treatment X (status quo), it would cost 50,000 with 40 percent effectiveness, For Treatment Y, it would cost 100,000 with 85 percent effectiveness, For Treatment Z, it would cost 75,000 with 65 percent effectiveness, and For Treatment V, it would cost 80,000 with 68 percent effectiveness.

A) Is there any treatment option that is not economically rational? Explain.

B) If hospital's willing to pay is $1000, which treatment option it would choose? Explain.

C) With technical innovation, suppose Treatment V increased its effectiveness to 75 percent, would your answer to question (a) above change?

3. Mastectomy costs around $20,000 with 99.76% survival rate in US. Then assume that patients have two options: getting Chemotherapy only or Radiation only. Chemotherapy initially costs 34,000 and annual follow up costs (including the first year) is $1,000. Radiation only initially costs for 15,000 and annual follow up costs including the first year) is $850. 9 years survival rate for chemo only patients are 96.2% and radiation only patients are 95%. What are the expected cost for mastectomy only patients, mastectomy and chemo patients, and mastectomy & radiation patients?