Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Case Study: Should My Firm Accept This Contract?
You are the manager of a 20-physician cardiology practice. You are getting ready to advise your board about a proposal for capitated specialty care from a local HMO. Data from your fee-for-service practice show billings per member per month of $100 for visits, $80 for catheterizations, and $115 for lab. The practice owns the labs, and the profits are shared among the partners. Your estimate is that costs (aside from physician income) equal 25 percent of charges. The proposal from the HMO is for a rate of $275 per member per month. Your immediate reaction is to reject it. Your CFO makes two comments that give you pause: “Our overhead will drop significantly if we accept this proposal and convert 25 percent of our business to capitation. In addition, we should anticipate that our rates for visits, catheterizations, and tests will drop significantly once we convert. ”In this case the town has only two other cardiology groups. You are not sure whether they have been asked to bid or not. Your legal counsel has warned you that direct discussions with your rivals might leave you open to an antitrust suit.
Discussion questions:
• Why is your initial response to reject the offer?
• Why might overhead go down if you accept the contract?
• Why might utilization rates go down?
• What are the risks of accepting or refusing?
• What should you do next? Should you accept the proposal? Should you make a counteroffer?
The Aqua Liquid Assets Money Market Mutual Fund has a NAV of $1 per share. During the year, the assets held by this fund appreciated by 1.1 percent. If you had invested $15,000 in this fund at the start of the year, how many shares would you own at t..
Miller Corporation has a premium bond making semiannual payments. The bond has a coupon rate of 7 percent, a YTM of 5 percent, and 17 years to maturity. The Modigliani Company has a discount bond making semiannual payments. If interest rates remain u..
What is the yield to maturity of a 23 year old bond that pays a coupon rate of 8.25% per year, has $1,000 par value and is currently priced at $1298.05? (Assume semi annual coupon payments)
Compute each of the ratios for 2013 and 2014 and indicate whether each ratio was getting "better" or "worse" from 2013 to 2014 and whether the 2014 ratio was "good" or "bad" compared to the Industry Avg (round all numbers to 2 digits past the deci..
If you borrow $2,500 from a bank now, at nominal interest rate of i (annual percentage rate, APR) compounded quarterly, and if you pay to the bank a year from now $2,700 what is the value of i? What is the effect interest rate (annual percentage yiel..
Corporations What is the primary disadvantage of the corporate form of organization? Name at least two advantages of corporate organization.
Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $96, $315, and $114, respectively. If Able undergoes a 2-for-3 reverse stock split, what is the new divisor?
You recently purchased a stock that is expected to earn 24 percent in a booming economy, 13 percent in a normal economy, and lose 2 percent in a recessionary economy. There is a 24 percent probability of a boom, a 61 percent chance of a normal econom..
Based on the information below, calculate the weighted average cost of capital. So the question is asking for the weighted average cost of capital. Great Corporation has the following capital situation. Debt: One thousand bonds were issued five years..
The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up." As a result, the cemetery project will provide a net cash inflow of $88,000 for the firm during the first year, and th..
A 5.55 percent coupon bond with ten years left to maturity is priced to offer a 7.0 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.0 percent. What is the change in price the bond will experience in dollars?
Safe Bulkers is considering the purchase of a used bulk carrier for $8 million. The forecast revenues are $5 million a year and operating costs are $ 4 million. Maintenance expenses costing $2 million will be required after both the 5th year and 10th..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd