...suddenly lost all of its cardiovascular surgeons...heads will roll. However, if there are a major lost of service such as the cardiovascular surgeon...there will be a decrease in the volume due to the lost of services. Thus when the hospital have a reduce in the total volume it will also have a reduce in total cost. If the hospital is operating under statistics budget...in the long run, through the development or discontinuation of certain programs volume may be changed, most healthcare firms implicitly assume while developing their statistics budget that they cannot affect their overall volume during the next budgetary period. (Essentials of Health Care Finance, 7th Edition. Jones & Bartlett Publishers p. 362). 2. Question : (TCO 7) Explain the difference between a horizontal merger and a vertical merger. Student Answer: Horizontal mergers involve two firms operating in the same kind of business...i.e...The merger between Hospital A and Hospital B is considered to be a horizonal mergers. Both have the same service or product. Vertical mergers A merger between two companies producing different goods or services for one specific finished product..i.e..Laboratory services and Radiology services...these two have different services or products thus it considered a vertical mergers. (Essentials of Health Care Finance, 7th Edition. Jones & Bartlett Publishers p. 443). 3. Question : (TCO 1) Describe the Outpatient Code Editor. Student Answer: A software package developed...
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...Question 1: Proficient-level: "List and describe the purpose of each part of a time line with an initial cash inflow and a future cash outflow. Which cash flows should be negative and which positive?" (Cornett, Adair, and Nofsinger, 2016, p. 95). The cash flow timeline is a visual depiction of inflows and outflows relative to the period under consideration. Cash flows are illustrated above the cash flow line with the corresponding periods that apply appearing under the cash flow diagram. Inflows are represented by positive numbers and outflows by negative numbers. Distinguished-level: State the reason for showing both a negative and positive amount on the time line. Showing a negative or positive amount on the timeline shows where money has been contributed or lost (negative) and where money has been earned (positive). By using the negative and positive values for cash flow, the timeline is aligned with accounting practices of debits and credits Question 2: Proficient-level: "How are the present value and future value related?" (Cornett, Adair, & Nofsinger, 2016, p. 95). The measure that relates present values to future values is the interest rate i. A present value can be moved forward in time with interest to arrive at the future value (). A future value can be discounted back to the present by rearranging the equation so that the FV is divided by the interest factor. Distinguished-level: Explain why a dollar is worth more today than a dollar received a year...
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...CHAPTER 4 Discounted Cash Flow Valuation What do baseball players Jason Varitek, Mark Teixeira, and C. C. Sabathia have in common? All three athletes signed big contracts in late 2008 or early 2009. The contract values were reported as $10 million, $180 million, and $161.5 million, respectively. But reported figures like these are often misleading. For example, in February 2009, Jason Varitek signed with the Boston Red Sox. His contract called for salaries of $5 million, and a club option of $5 million for 2010, for a total of $10 million. Not bad, especially for someone who makes a living using the “tools of ignorance” (jock jargon for a catcher’s equipment). A closer look at the numbers shows that Jason, Mark, and C. C. did pretty well, but nothing like the quoted figures. Using Mark’s contract as an example, although the value was reported to be $180 million, it was actually payable over several years. It consisted of a $5 million signing bonus plus $175 million in future salary and bonuses. The $175 million was to be distributed as $20 million per year in 2009 and 2010 and $22.5 million per year for years 2011 through 2016. Because the payments were spread out over time, we must consider the time value of money, which means his contract was worth less than reported. How much did he really get? This chapter gives you the “tools of knowledge” to answer this question. 4.1 Valuation: The One-Period Case Keith Vaughn is trying to sell a piece of raw land in Alaska. Yesterday...
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...© Nikada/iStockphoto.com Chapter 28 Time Value of Money © Cengage Learning. All rights reserved. No distribution allowed without express authorization. In Chapter 1, we saw that the primary objective of financial management is to maximize the intrinsic value of a firm’s stock. We also saw that stock values depend on the timing of the cash flows investors expect from an investment—a dollar expected sooner is worth more than a dollar expected further in the future. Therefore, it is essential for financial managers to understand the time value of money and its impact on stock prices. In this chapter we will explain exactly how the timing of cash flows affects asset values and rates of return. The principles of time value analysis have many applications, including retirement planning, loan payment schedules, and decisions to invest (or not) in new equipment. In fact, of all the concepts used in finance, none is more important than the time value of money (TVM), also called discounted cash flow (DCF) analysis. Time value concepts are used throughout the remainder of the book, so it is vital that you understand the material in this chapter and be able to work the chapter’s problems before you move on to other topics.1 There are no Beginning-of-Chapter Questions for this chapter. 1. The problems can be worked with either a calculator or an Excel spreadsheet. Calculator manuals tend to be long and complicated, partly because they cover a number of topics that aren’t used in...
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...The Apothecary Compounding Center: Global Operations Management 7313 Term Project EXECUTIVE SUMMARY In an attempt to meet the patient demand for compounding services within the Memphis metropolitan population, we will establish the Apothecary Compounding Center on the campus of Baptist Memorial Hospital. Our goal is to cater to patients in this area that need individualized medication regimens and want a close relationship with their pharmacist. As we develop our business, we want to focus on maximizing the safety and efficacy of our compounded products. We will utilize the Professional Compounding Centers of America, or PCCA, in order to help accomplish this goal. This organization offers many important benefits to compounding pharmacies in all stages of their development. Our employees will be trained by PCCA, which will hone their working knowledge of USP <797>, crucial guidelines that every compounding pharmacy must follow. In addition to training, PCCA will serve as our supplier, which will ensure quality products with which to compound. Furthermore, we will have access to numerous formulas that are specific to PCCA, which will greatly benefit our operation. The number of patients needing compounded prescriptions has risen in recent years, and we aim to capitalize on this growing demand. Our patient population will largely consist of patients from the clinics of Baptist, but we hope to expand our patient base to include anyone that could...
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...27 THE BASIC TOOLS OF FINANCE WHAT’S NEW IN THE SIXTH EDITION: There are two new In the News boxes on “A Cartoonist’s Guide to Stock Picking” and “Is the Efficient Markets Hypothesis Kaput?” LEARNING OBJECTIVES: By the end of this chapter, students should understand: the relationship between present value and future value. the effects of compound growth. how risk-averse people reduce the risk they face. how asset prices are determined. CONTEXT AND PURPOSE: Chapter 27 is the third chapter in a four-chapter sequence on the level and growth of output in the long run. In Chapter 25, we discuss how capital and labor are among the primary determinants of output and growth. In Chapter 26, we addressed how saving and investment in capital goods affect the production of output. In Chapter 28, we will show some of the tools people and firms use when choosing capital projects in which to invest. Because both capital and labor are among the primary determinants of output, Chapter 28 will address the market for labor. The purpose of Chapter 27 is to introduce the students to some tools that people use when they participate in financial markets. We will show how people compare different sums of money at different points in time, how they manage risk, and how these concepts combine to help determine the value of a financial asset, such as a share of stock. KEY POINTS: Because savings can earn interest, a sum of money today is more valuable than the same sum of money...
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...process of business firms operating under conditions of risk and uncertainty. Managerial Economics, thus, uses concepts, models and analytical techniques of economics to study and analyse the operations of businesses and the type of problems managers face. Hence it provides important conceptual insights for gaining a better understanding of business environment and for making of quality business decisions with minimal trial and errors. 2. Objectives: 2.1 To provide participants with a much clearer view of the applicability and relevance of economics to decision making within business firms. 2.2 To develop students’ knowledge of applied economics 2.3 To develop students’ analytical skills to a higher level. 2.4 To enhance students’ insight into the operation of business and the nature of problems managers face. 3. Course coverage * Introduction of students to Managerial Economics and the use of models and other analytical concepts in decision making process. * Introduction to the concept of risk and uncertainty and adjustment of decisions to reflect decision maker’s attitude towards risk. * Behaviour of consumers and demand side of the firm and demand estimation and forecasting. * Strategic decisions that managers have to make – eg pricing strategies, production decisions, product quality and designs, advertising and promotion...
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...venture capitalist because of the: | | | | | Correct Answer: | size of investment. | | | | | * Question 4 1 out of 1 points | | | This should be the primary objective of a firm as it may actually be the most beneficial for society in the long run. | | | | | Correct Answer: | Maximizing shareholder value | | | | | * Question 5 1 out of 1 points | | | Which of the following statements is correct? | | | | | Correct Answer: | Sole proprietorships are easy to start. | | | | | * Question 6 1 out of 1 points | | | The practice generally known as double taxation is due to: | | | | | Correct Answer: | corporate incomes being taxed at the corporate level, then again at the shareholder level when corporate profits are paid out as dividends. | | | | | * Question 7 1 out of 1 points | | | What is the difference in perspective between finance and...
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...MBA7001 Accounting for Decision-Makers Week 6 Lecture – Capital Investment Appraisal Slide 10.2 Chapter 10 Making capital investment decisions LEARNING OUTCOMES CHAPTER 10: Investment Appraisal Methods You should be able to: Explain the nature and importance of investment decision making First hour – 23.11.11 Identify the four main investment appraisal methods found in practice •Payback •ARR Use each method to reach a decision on a particular investment opportunity Discuss the attributes of each of the methods 1 Atrill and McLaney, Accounting and Finance for Non-Specialists, 7th Edition, © Pearson Education Limited 2011 Investment Appraisal Investment appraisal methods used in practice Investment appraisal – the process of appraising the potential investment projects. Assessment of the level of expected returns earned for the level of expenditure made. Estimates of future costs and benefits over the project’s life. 3 • Every business would like to do everything • But it all costs • Capital expenditure on new projects or purchases (fixed assets) needs to be planned • Capital is always rationed Scenario: • Your business wishes to expand its product line • It is considering Products A and B but it can only afford to do one. • How does it decide? What main factors affect the investment decision • How much will it cost ? Investment appraisal methods used in practice • How much will I get back ? • When will I get the income ? • 4 main techniques available ranging from ...
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...asset investments. 1. Flexibility. Current liabilities can be used to match the timing of a firm’s short-term financing needs exactly. 2. Interest cost. Historically, the interest cost on short-term debt has been lower than that on long-term debt. C. Following are the disadvantages commonly associated with the use of short-term debt: 1. Short-term debt exposes the firm to an increased risk of illiquidity because short-term debt matures sooner and in greater frequency, by definition, than does long-term debt. 2. Since short-term debt agreements must be renegotiated from year to year, the interest cost of each year’s financing is uncertain. III. Determining the appropriate level of...
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...McLeavey, CFA Jerald E. Pinto, CFA David E. Runkle, CFA John Wiley & Sons, Inc. QUANTITATIVE INVESTMENT ANALYSIS WORKBOOK CFA Institute is the premier association for investment professionals around the world, with over 85,000 members in 129 countries. Since 1963 the organization has developed and administered the renowned Chartered Financial Analyst Program. With a rich history of leading the investment profession, CFA Institute has set the highest standards in ethics, education, and professional excellence within the global investment community, and is the foremost authority on investment profession conduct and practice. Each book in the CFA Institute Investment Series is geared toward industry practitioners along with graduate-level finance students and covers the most important topics in the industry. The authors of these cutting-edge books are themselves industry professionals and academics and bring their wealth of knowledge and expertise to this series. QUANTITATIVE INVESTMENT ANALYSIS WORKBOOK Second Edition Richard A. DeFusco, CFA Dennis W. McLeavey, CFA Jerald E. Pinto, CFA David E. Runkle, CFA John Wiley & Sons, Inc. Copyright c 2004, 2007 by CFA Institute. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning...
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...value. Describe how the interest rate can be used to adjust the value of cash flows – both forward and backward – to a single point in time. Calculate both the future and present value of: (a) an amount invested today; (b) a stream of equal cash flows (an annuity); and (c) a stream of mixed cash flows. Distinguish between an “ordinary annuity” and an “annuity due.” Use interest factor tables and understand how they provide a shortcut to calculating present and future values. Use interest factor tables to find an unknown interest rate or growth rate when the number of time periods and future and present values are known. Build an “amortization schedule” for an installment-style loan. n n Compounding More Than Once a Year Semiannual and Other Compounding Periods • Continuous Compounding • Effective Annual Interest Rate n n n Amortizing a Loan Summary Table of Key Compound Interest Formulas Summary Questions Self-Correction Problems Problems Solutions to Self-Correction Problems Selected References n n n n n n n n n n n 39 Part 2 Valuation The chief value of money lies in the fact that one lives in a world in which it is overestimated. —H. L. MENCKEN A Mencken Chrestomathy The Interest Rate Which would you prefer – $1,000 today or $1,000 ten years from today? Common sense tells us to take the $1,000 today because we recognize that there is a time value to money. The immediate receipt of $1,000 provides us with the opportunity to put our...
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...arise if the owners of the firm had complete information about the activities of the managers. C. In financial markets helps to explain why equity is a relatively important source of finance for American business. D. All of the above. E. Only A and B of the above. ( ) 2. In a partnership form of organization, income tax liability, if any, is incurred by: A. The partnership itself. B. The partners individually. C. Both the partnership and the partners. D. Neither the partnership nor the partners. ( ) 3. One common reason for partnerships to convert to a corporate form of organization is that the partnership: A. Faces rapidly growing financing requirements. B. Wishes to avoid double taxation of profits. C. Has issued all of its allotted shares. D. Agreement expires after ten years of use. ( ) 4. When a corporation fails, the maximum that can lose by an investor protected by limited liability is: A. The amount of the initial investment. B. The amount of the profit on the investment. C. The amount necessary to pay the corporation's debts. D. The amount of the investor's personal wealth. ( ) 5. Which of the following is not an advantage to incorporating a business? A. Easier access to financial markets. B. Limited liability. C. Becoming a permanent legal entity. D. Profits taxed at the corporate level and the shareholder level. ( ) 6. Unlimited liability is faced by the owners of: A. Corporations. B. Partnerships and corporations. C. Sole proprietorships...
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...students are responsible for the material covered during the absences. Faculty cannot grant requests for excessive amounts of make-up material, and they may request written documentation detailing the reason for the absences. Excessive absences make it almost impossible for a student to meet the academic objectives of a course; they frequently cause a student to receive a lower grade, even though, the absences were unavoidable. Strayer University requires all faculty members to take attendance during each class period and to record it accurately on their permanent roster. This data is available for verification of attendance by the appropriate governmental agencies and educational accrediting organizations. A student who is absent from four consecutive class meetings, excluding holidays and emergency cancellation of classes, will be withdrawn automatically from that course. A student will be withdrawn automatically from a mini-session course when he/she misses two consecutively scheduled class meetings. Students not attending scheduled on-ground classes will receive zero points for the weekly discussions. Students arriving to class (or leaving class) more than 30 minutes late/early will receive a 2 point deduction for all discussions. Students arriving (or leaving class) more than 1 hour late/early will receive a 5 point deduction for all discussions. Late Work Submissions If a student anticipates the need to submit work after the due date and the reason for the late...
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...make better choices in how we spend our money. TVM is also known as Time Value of money which is a given amount of interest earned in a period of time (Wikipedia, 2011). Each member in group “C” will use 100 as our present value and we will choose an interest rate and period. Time value of money concept is used to determine present and future values of money. “The time value of money refers to the relationship between time, money, and the rate of interest.” (Letsche, 2011). The formula consist of four components FV = Future Value, PV = Present Value, i = the interestrate per period and n= the number of compounding periods (TeachMeFinance.com). In business, TVM is used to evaluate expected returns on investments and monitoring the company’s cash flow. “However, understanding the time value of money is also very important for you as an self-employed business person to make sure you are able to realize your spending, purchasing and retirement goals.” (Loughran, 2011). On a personal level, individuals can use TVM to calculate interest that will be paid on mortgages, car payments and individual loans. Knowing how your money can work for you is important to personal financial success. When one considers the time value of money it is important to understand that “a dollar can be invested and earn interest over time” (Myers, 2011). Time value of money is a very important concept in the role of investing money. This would be...
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