PACIFIC HEALTHCARE IS an investor-owned hospital chain that owns and operates nine hospitals in Washington, Oregon, and Northern California Marcia Long, a recent graduate of a prominent health services administra tion program, has just been hired by Washington Medical Center, Pacific's largest hospital. Like all new management personnel, Marcia must undergo three months of intensive indoctrination at the system level before joining the hospital. In Case 13, Marcia conducted an analysis of Pacific's bonds and presented her findings to the company's executive committee. Pacific's chief financial officer, Hugo Welsh, was very impressed with the quality of her presentation, Furthermore, other members of the committee stated that they learned great deal about debt financing from the presentation and would like to see a similar presentation on equity financing. Because Marcia would be leaving corporate headquarters to start her hospital assignment in less than four weeks, Hugo immediately assigned her the task of analyzing Pacific's equity situation and preparing another presentation for the executive committee. Marcia began by reexamining Pacific's annual report to get some basic financial data. Then, she searched Yahoo! Finance (http://finance yahoo. com), CNNMoney (http://money.cnn.com), Bloomberg (www.bloomberg, com), and MSN Money (http://money.min.com) for current market data as well as analysts' forecasts for Pacific Healthcare and the market. She discovered that Pacific's stock is currently (December 31, 2017) selling for per share, current dividend is $0.480 per share (paid on December 31, 2017), and beta coefficient is 1.2. In addition, she learned that the yield on long-term Treasury bonds is 5.0 percent and that a market return of 11 $8