Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Healthcare Financial Management and Economics Week 10 Assignment Capital Budgeting -PLEASE SHOW WORK... There are many options to buy capital, including cash purchases, loans, leasing,

Healthcare Financial Management and Economics Week 10 Assignment Capital Budgeting -PLEASE SHOW WORK...

There are many options to buy capital, including cash purchases, loans, leasing, and other forms of payment. Your goal as a healthcare manager is to determine which method is best for your organization, given its financial and organizational structure (i.e., for-profit or not-for-profit). Time value of money and net present value are two techniques that may help you determine how and when to invest in new capital. For this Assignment, you examine these concepts as they pertain to the healthcare industry. Use the Week 10 Assignment Capital Budget Excel Template to show your work, answer the following questions:

1. If a physician deposits $19,000 today into a mutual fund that is expected to grow at an annual rate of 8%, what will be the value of this investment: a. 3 years from now b. 6 years from now c. 9 years from now d. 12 years from now.

2. The Chief Financial Officer of a hospital needs to determine the present value of $140,000 investment received at the end of year 5. What is the present value if the discount rate is: a. 3% b. 6% c. 9% d. 12% .

3. An eye Surgeon purchases a new Lasix laser for their office for $700,000. The expected cash flows for each year of five-year period is $114,000, $160,000, $190,000, $ 210,000, and 240,000 for the 5 years. What is the internal rate of return or IRR for the project?

4. Determine the Net Present Value for Problem 3 with an interest rate of 10%. Do you proceed or not with the project?

5. Determine the Payback Period for Question 3.

Problem 1
A B C D
Future Future
Present Value Value Future
Value Factor Factor Value
a)
b)
c)
d)
Problem 2 A B C D
Present Present
Future Value Value Present
Value Factor Factor Value
a)
b)
c)
d)
Problem 3
IRR
Year Cash Flow Cummulative Cash Flow
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
IRR= %
Problem 4
Excel
less the investment
NPV
Accept or do not accept the project
Problem 5
What is the payback period for problem 3?
Payback period = Year before recovery + Year before cummulative cash flow/cash flow for year paid off
Payback period (show calculation) =
Payback period (show answer)=

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cornerstones Of Financial Accounting

Authors: Jay Rich, Jefferson Jones, Maryanne Mowen, Don Hansen, Donald Jones, Ralph Tassone

2nd Canadian Edition

0176707123, 978-0176707125

More Books

Students also viewed these Accounting questions

Question

OUTCOME 5 Discuss sexual harassment as an employment equity issue.

Answered: 1 week ago