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

Ias1 contents of financial statements, IAS 1 contents of financial statemen...

IAS 1 contents of financial statements IAS 1 prescribes the contents of published financial statements. The major reports that are included as part of the published financial sta

Determine annual effective cost, Q. Determine Annual effective cost? (...

Q. Determine Annual effective cost? (i) Payables policy One month cost of taking extended trade credit = 1.5/98.5 = 1.52% Annual effective cost = 1.015212-1 = 19.8%

Partnership and sole trader, what are the advantage and disadvantage to mr ...

what are the advantage and disadvantage to mr fish, mr Lobster of forming a partnership rather than a close corporation or a company?

Describe the concept of full cost recovery with examples, Describe the conc...

Describe the concept of full cost recovery with illustrative examples.

Debtor management, what is the process to complete my debtor management pro...

what is the process to complete my debtor management project.

The garraty company, The Garraty Company has two bond issues outstanding.Bo...

The Garraty Company has two bond issues outstanding.Both bonds pay $100 yearly interest plus $1,000 at maturity. Bond L has a maturity of 15 years, and Bond S a maturity of 1 year.

Temporary-timing differences-financial statement , Temporary or Timing diff...

Temporary or Timing differences Temporary/timing differences relate to those items that are adjusted in the current period and are again adjusted in subsequent financial period

Finding the present value, We have discussed the computation of the future ...

We have discussed the computation of the future value in the previous sections; here let us work the process in opposite. Let us assume you have won a lottery ticket worth Rs. 1000

TRADE AND PROFIT AND LOSS ACCOUNT, The following figures are taking from th...

The following figures are taking from the book of Sheen Compnay limited as on december 31,2009 DEBIT SIDE : opening stock Rs 75000 purchases 245000 wages 30000 c

Calculate the cash flow-agency costs, Tom Scott is the owner, president, an...

Tom Scott is the owner, president, and primary salesperson for Scott Manufacturing. Because of this, the company's profits are driven by the amount of work Tom does. If he works 40

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