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hca270WK5appendixC - being double the annual revenues that...

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Axia College Material Appendix C Approaches to Valuation Part I : Compute the worth of Arcadia Hospital in 2005 using rules of thumb, adjusted book value, and discounted cash flow valuation (for this final method, use the table provided). Assume the cash flow for 2005 is the same as 2006. 1) Rules of thumb: multiple of revenues, earnings, book value, measured unit. 2) Adjusted book value: records of the company’s financial statement assist in determining value. 3) Discounted cash flow: that can use present value of a company’s expected cash flow. Part II : Compare your findings for each valuation method, and discuss any differences or similarities between the calculated values. What method do you think gives the most accurate picture of the worth of Arcadia in 2005? Explain your answer. The diverse range methods differ somewhere as of $1,136,000 to $7,900,000. With the rule of thumb
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Unformatted text preview: being double the annual revenues that is $1,136,000 also the adjusted book value that is the owners' equity is $7,900,000, by means of the discounted cash flow of $655,000,000. This specifies that the high range is roughly six times greater than the low range plus this allows a broad opening among the figures that is tough to conclude the worth of the hospital. I believe the discounted cash flow is the finest method to show a further correct image of the assessment of the Arcadia Hospital in the year of 2005, since adjusted book value is to wide-ranging for it to be precise. HCA 270 Cash Flow amount Capitalization Rate Value $655,000,000 6% $39,300,000 8% $52,400,000 10% $65,500,000 12% $78,600,000...
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