If a physician deposits $44,000 today into a mutual fund that is expected to grow at an annual rate of 8%, what will be the value of this investment:

1. 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 $230,000 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. Ford Hospital plans to purchase a new MRI machine for 1.5 million. The expected cash flows for each year of the five year period is $330,000, $460,000, $495,000, $510,000, and $560,000 for the five years. What is the internal rate of return or the 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 Problem 3.