Is the emergency center a wise use of the hospital''s , Financial Accounting

Assignment Help:

Consider a not-for-profit hospital faced with a familiar choice: to open or not to open an emergency center in a new suburban hospital shopping mall.  The mall's developers claim that referrals alone will make the center a financial winner of the hospital.  Cautious analysis in the comptroller's office argue that the startup costs of the center, and its annual cash outflows (including insurance), will be a major drain on the hospital's overall cash flow.  Initial cash outflows for the center are projected as follows: $300,000 for equipment, furniture, and fixtures; and $75,000 for new working capital (inventory, accounts receivable, cash on hand).  Analysts in the planning department estimate that the center will generate 8 visits per day, 7 days per week, 52 weeks per year, with average cash inflow per visit of $50.  The planning analysts also estimate $125,000 per year in net cash flows from increased admissions to the hospital.  Annual operating expenses of the center will be $200,000.  The hospital's weighted average cost of capital is 5 percent.  As a not-for-profit provider, the hospital has zero income tax rate.  The center has a expected life of 10 years and the expected salvage value of the clinic after 10 years will be $50,000.  Is the emergency center a wise use of the hospital's limited funds? You may use the following framework to set up the problem (10 points).

Year    Cash        Direct Cash    Indirect Cash    Net Cash    
        Outflow        Inflow              Inflow              Flow        

0                                    
1                                    
2                                    
3                                    
4                                    
5                                    
6                                    
7                                    
8                                    
9                                    
10


Related Discussions:- Is the emergency center a wise use of the hospital''s

Tax expense, 1. An organization owes £300,000 tax at 1.7.X4 and £450,000 at...

1. An organization owes £300,000 tax at 1.7.X4 and £450,000 at 30.6.X5. Its income statement for the year to 30.6.X5 includes a tax charge of £400,000. How much tax was actually pa

Debenture, X co has a bond outstanding that carries a coupon rate of 90% an...

X co has a bond outstanding that carries a coupon rate of 90% and current maturity is 15yrs and the call price is Rs 1060 per bond(25000 bonds Rs 1000 face amount)9% bond had origi

Determine the net present value , A project requires a net investment of $4...

A project requires a net investment of $450,000. It has a profitability index of 1.25 based on the firm's 12 percent cost of capital. Determine the net present value of the project

Show danger of high financial gearing, Q. Show danger of high financial gea...

Q. Show danger of high financial gearing? A additional danger of high financial gearing is that a company may move into a loss-making position as a result of high interest paym

Determine straight value and conversion value , Banana Computer has a perpe...

Banana Computer has a perpetual, convertible 7% annual coupon bond outstanding. The bond has a face value of $1,000 and has a conversion price of $40. The required return on an oth

Financial accounting , a. Create a worksheet in your excel file and name it...

a. Create a worksheet in your excel file and name it "Part A Q2". In column A to E set up general journal and input the necessary journal entries to record the transactions and eve

Illustration of admissions and retirements, Illustration of Admissions and ...

Illustration of Admissions and Retirements Jim and Ken have been trading in partnership for several, sharing profits or losses equally after allowing for interest on their capi

Which actions are most likely to directly increase cash, Which of the follo...

Which of the following actions are most likely to directly increase cash as shown on a firm's balance sheet? Explain and state the assumptions that underlie your answer. 1. It i

Franchise, gershwin coporation obtained afranchise fron sonic hedgeehog inc...

gershwin coporation obtained afranchise fron sonic hedgeehog inc .for a cash payment of $ 120000 on april 1,2010 . the franchise grants gershwin the right to sell certain product a

Vital essential and desirable analysis, VED Analysis: VED i.e. Vital, E...

VED Analysis: VED i.e. Vital, Essential and Desirable analysis is a technique employed for spare part inventory analysis and is broadly used in the automobile industry particul

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

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!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd