9/1/2014
PROBLEM 1
Find the following values for a lump sum:
- The future value of $500 invested at 8 percent for one year
- The future value of $500 invested at 8 percent for five years
- The present value of $500 to be received in one year when the oppo
UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
Chapter 4 - Time Value Analysis
PROBLEM 2
What is the effective annual rate (EAR) if the stated rate is 8 percent and compounding occurs
semiannually? Quarterly?
Rate
ANSWER
8%
a:
b:
8.16 8.243216
UNDERSTANDIN
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UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
Chapter 8 - Lease Financing
PROBLEM 1
Suncoast Healthcare is planning to acquire a new X-ray machine that costs $200,000. The business can
either lease the machine using an operating lease or buy it u
9/1/2014
UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMEN
Chapter 5 - Financial Risk and
PROBLEM 1
Consider the following probability distribution of returns estimated for a proposed project that involves a
new ultrasound machine:
State of the
Probability
eco
9/1/2014
UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
Chapter 6 - Debt Financing
PROBLEM 1
Assume Venture Healthcare sold bonds that have a ten-year maturity, a 12 percent coupon rate with
annual payments, and a $1,000 par value.
a. Suppose that two year
9/1/2014 UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT
Chapter 9 - Cost of Capital
PROBLEM 1
Calculate the after-tax cost of debt for the Wallace Clinic, a for-profit healthcare provider, assuming that
the coupon rate set on its debt is 11 percent and its
Case 13
Mark Stephens
T-bill
Project A
Project B
S&P 500 Fund
Equity in MSI
Rate of return Variation
St dev
Prob
7%
0%
0
13.50%
137.25
11.72
8.80%
82.56
9.09
15.00%
270.00
16.43
10.00%
30.00
5.48
The T-bill has the lowest rate of return (7%) but also has
Case 12
Mark Stephens
Problem 1
SunTrust
Savings Account
CD
Term Loan
Bank South
4.08%
6.17%
8.24%
4.18%
6.10%
8.22%
.
Selection
Bank South for Savings (4.18% > 4.08%)
Sun Trust for CDs (6.17% > 6.10%)
Bank South for Term Loan (8.22% < 8.24%)
Rates -CDs
6
9/1/2014
UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMEN
Chapter 5 - Financial Risk and
PROBLEM 1
Consider the following probability distribution of returns estimated for a proposed project that involves a
new ultrasound machine:
State of the
Probability
eco