Determine the payback for the new center

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Reference no: EM131924821

Question: 1. AlAmal Hospital is expecting its new center to generate the following cash flows:

Years

0

1

2

3

4

5

Initial
investment

($30,000,000)





Net operating cash flows


$6,000,000

$8,000,000

$16,000,000

$20,000,000

$30,000,000

a. Determine the payback for this new center.

b. Determine the net present value using a cost of capital of 15 percent.Should the project be accepted?

2. Assume a zero coupon Bond with a $1000 Par Value and 15-year maturity, calculate its rate of return if the market price equal $315.240.

3. A tax exempt bond was issued at a 10% coupon bond and a maturity of 15 years. The Par Value of the bond is $1000.

At what required market rate (10%, 5% or 14%) does the above bond sell at a discount? At a premium?

Reference no: EM131924821

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