11 15 16 17.docx - Problem 11-15 ROI for an investment center Outpatient Clinic Year 1 A B Revenues[Given \$1,750,000 Expenses[Given \$1,270,000 C Initial

# 11 15 16 17.docx - Problem 11-15 ROI for an investment...

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Problem 11-15 ROI for an investment center: Outpatient Clinic A B C D E Initial Desired Revenues Expenses Investment ROI ROI [Given] [Given] [Given] [(A-B)/C] [Given] Year 1 \$1,750,000 \$1,270,000 \$3,300,000 14.5% 12.0% The ROI for the outpatient center in the first year is: 14.5% This exceeds or is equal to the desired value of: 12.0%
Problem 11-16 ROI for an investment center: Have a Heart Hospital Givens: A Patient volume 7,000 B Revenues per patient \$640 C Variable costs per patient \$329 D Fixed costs \$2,000,000 E Initial investment \$1,000,000 (\$950K Equip. + \$50K Renovation) F Desired return on investment 12% G H I J K L Fixed Variable Initial Revenues Costs Costs Profit Investment ROI [A x B] [D] [A x C] [G - H - I] [E] [J / K]
Year 1 \$4,480,000 \$2,000,000 \$2,303,000 \$177,000 \$1,000,000 17.7% ROI for the cardiac cath lab in the first year is: 17.7% which does meet the desired ROI of: 12.0% Problem 11-17 Detailed variance analysis: Cutting Edge Surgery Center a. Total variance between the planned and actual budgets. Variance b Givens: Budgeted a Actual A Surgical volume 2,500 2,700 B Gift shop revenues \$19,000 \$20,000 C Surgery revenues \$600,500 \$850,750 D Parking revenues \$16,000 \$18,000 E Surgical volume

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• Fall '08
• JONES

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