Healthcare Finance Chapter#9 Answers Essay

Words: 1219
Pages: 5
Open Document
Financial Condition Analysis, Chapter 9
Problems: P 9.1-9.4, 9.8 & 9.11
HM 707 Health Management Foundations II

Problem 9.1
Find the following values for a lump sum assuming annual compounding: a) The future value of $500 invested at 8 percent for one year:

FVN = FV1= PV × (1 +I)N = $500 x (1 + 0.08) = $500 x 1.08 = $540 b) The future value of $500 invested at 8 percent for five years:

FVN = FV5= PV × (1 +I)N = $500 x (1 + 0.08)5 = $500 x (1.08)5 = $734.66

c) The present value of $500 to be received in one year when the opportunity cost rate is 8 percent (discounting):

PV = FVN = $5001 = $500 = $462.96 (1 + I)N (1 + 0.08)1 (1.08)1

d) The present value of $500 to be received in …show more content…
PV = $2,457.84

b) The future value of $400 per year for 10 years at 10 percent-

Future Value= (Interest rate, Number of periods, Payment) formula in excel

PV = 0, PMT = -400, N = 10, I = 10, FV =?

FV = $6,374.97

c) The present value of $200 per year for 5 years at 5 percent

PV (Annuity) = (Interest rate, number of periods, Payment) formula in excel
I= 5%, N=5, PMT=$-200, PV=?
PV = $865.90

d) The future value of $200 per year for 5 years at 5 percent-

Future Value= (Interest rate, Number of periods, Payment) formula in excel
PV = 0, PMT = -200, N = 5, I = 5, FV =?
FV = $1,105.13

Problem 9.8
What is the present value of perpetuity of $100 per year if the appropriate discount rate is 7 percent? Suppose that interest rates doubled in the economy and the appropriate discount rate is now 14 percent. What would happen to the present value of the perpetuity?
PV (Perpetuity) = Payment = PMT Interest Rate I

PV = $100 = $1,428.57 0.07

PV (Perpetuity) = Payment = PMT Interest Rate I

PV = $100 = $714.29 0.14

Therefore the perpetuity decreases because of the higher interest rate. This is because the value of the perpetuity changes dramatically when the opportunity costs (interest rates) change.

Problem 9.11
Consider the following investment cash flows:
Year Cash Flow 0
Show More

Related Documents: Healthcare Finance Chapter#9 Answers Essay

About Mey and You Essay

Young: Instructor’s Resource Manual for Kinn’s The Administrative Medical Assistant, 6th Edition Chapter 10: Scheduling Appointments Instructor’s Resource Manual National Accreditation Competencies and Content |CAAHEP COMPETENCIES |ABHES COMPETENCIES | |Administrative |Professionalism |…

Words 5110 - Pages 21

Health FInance Essay

Health Finance Chapters 9, 14 9.1) A. What is the opportunity cost rate? B. How is it used in time value analysis? C. Is this a single number that is used in all situations? A - Opportunity Cost = the cost associated with alternative uses of the same funds. Example, if monies are used for one investment, it is no longer available for other uses, so an opportunity cost arises. Because on investment decision automatically negates all other possible investments…

Words 1801 - Pages 8

US Health Care Notes Essay

Political Science 320 B, Fall 2013 Lecture 11, Healthcare and Healthcare Reform Exam: Dec 9 3:30 Announcements – Today's topic (more than one day) healthcare. Health care readings are posted: one long, very interesting one (two chapters by Jacobs-Shapiro) on Clinton case. One short, on Obamacare. Healthcare and health care reform Introduction Discussion: what accounts for the big differences between the US and Canada in healthcare systems? Values, interest groups, institutions? Reasonable…

Words 4278 - Pages 18

Ebooks Solution Manuals and Test Banks for Text Books Essay

Cheng 11 Test Bank Advanced Engineering Mathematics by Dennis G. Zill and Michael R. Cullen 3 Solution Manual Advanced Engineering Mathematics by Erwin Kreyszig 9 Solution Manual Advanced Financial Accounting by Baker, Christensen, Cottrell 9 Instructor’s Resource Manual Advanced Financial Accounting by Baker, Christensen, Cottrell 9 Solution Manual Advanced Financial Accounting…

Words 19224 - Pages 77

Examples Of Prevention Of Divorce

Phuong Ho Prof. Janice Falbert CDFS 321 Section 9 Personal Relationships Wellness Philosophy Paper (PRW) Fall 2012 Marriage is one of the most essential factors of human life. It creates the basis for everyone to pursue a better, healthier, and happier life. However, it is the fact that there are more and more couples marrying and then ending up with divorce, and this rate is increasing faster year by year. Actually, all the divorce cases are originated from some of the forms of emotional illness…

Words 2266 - Pages 10

Pfizer to Acquire Protalix Essay

Growth Strategy 2 2. Pfizer's Road Map 4 2.1. Pfizer's Acquisitions Rational 4 3. The strategy behind the acquisition 5 3.1. Acquisition Motives 5 3.2. M&A vs. Alliance 5 4. Target Identification 7 4.1. Protalix - an R&D Acquisition 9 5. Synergy Analysis 10 6. Standalone, Synergy and Premium Valuations 12 6.1. Market Value 12 6.2.…

Words 10040 - Pages 41

System Media Assignment

System Media Assignment Georgiana Thomas HCS/482 April 10th, 2013 Michele Baham System Media Assignment Word processor; this is a software program. It is capable of creating, storing, and printing documents. It processes words, paragraphs, pages and entire papers. It enables one to create a document and store it electronically on a disk. It also has the capacity to…

Words 1941 - Pages 8

servqual Essay

NAME: AKMAL SYALWANI BINTI IDRIS MATRIX NO: 2010132513 DATE: 13TH SEPTEMBER 2013 RESEARCH PROPOSAL THE IMPACT OF SERVICE QUALITY ON CUSTOMER SATISFACTION IN AUTO BAVARIA, GLENMARIE: AN EMPIRCAL STUDY THROUGH SERVQUAL Abstract This research aims to investigate the relationship between the service quality and customer satisfaction in Auto Bavaria Glenmarie by using SERVQUAL analysis. It also aims to examine the influence and effect of applying quality service towards customer satisfaction…

Words 5549 - Pages 23

Essay on Financial Reporting, Financial Statement Analysis and Valuation a Strategic Perspective, 7th Edition James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

CHAPTER 1 OVERVIEW OF FINANCIAL REPORTING, FINANCIAL STATEMENT ANALYSIS, AND VALUATION Solutions to Questions, Exercises, and Problems, and Teaching Notes to Cases 1. Value Chain Analysis Applied to the Timber and Timber Products Industry. Exhibit 1.A below contains a depiction of the value chain. The links in the value chain are as follows: 1. Timber Tracts: Plant and maintain timber tracts (Weyerhaeuser) 2. Logging: Harvests timber (Weyerhaeuser) a. Sawmills:…

Words 14511 - Pages 59

Little Rock Nine and Oppressed Freire Essay

the Oppressed was written by educator Paulo Freire, proposes a pedagogy with a new relationship between teacher, student, and society. Humanization and Dehumanization * Freire talks about the concept of humanization throughout the majority of chapter one. Humanity includes qualities that make us human such as understanding, freedom, and integrity. * Freire stresses the point that not only do people need to demonstrate those qualities toward others, but also toward themselves. He mentions…

Words 3361 - Pages 14