Question: #1Your firm reduces its days in receivables from 87 to 67, which generates $3.4 million of new investment funds.Growth rate in new equity will increase because: (please discuss the reason for your choice)

1.Total asset turnover will increase

2.Investment income will increase

3.Both A and B

2.Activity:You have been asked to establish a pricing structure for radiology on a per-procedure basis.Present budget data is presented below:

Budgeted procedures:10,000

Budgeted cost$400,000

Desired profit$80,000

It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38 per procedure.Approximately 10 percent of the patients are cost payers.The remaining charge payers are summarized below:

PayerVolume%Discount %

Blue Cross204

Unity PPO1510

Kaiser1010

Self-pay540

50%

Question:#2What rate must be set to generate the required $80,000 in profit in the preceding example?