Time Value Analysis - Pensacola Surgery Center Case 12
Cases in Healthcare Finance - Louis C. Gapenski
3. Now consider the surgery centers' goal of having $200,00available in five years to buy new patient billing system.
a. What lump sum amount must be invested today in a CD paying 10percent annual interest to accumulate the needed $200,000?
b. What annual interest rate is needed to produce $200,000 after5 years if only $100,00 is invested?
4. Now consider a second alternative for accumulating funds tobuy the new billing system. In lieu of a lump sum investment,assume that five annual payments of $32,000 are made at the end ofeach year.
a. Waht type of annuity is this?
b. What is the present value of this annuity if the opportunitycost rate is 10 percent annually? 10 percent compoundedsemiannually?
c. What is the future value of this annuity if the payments areinvested in an account that pays 10 percent interest annually? 10percent compounded semiannually?
f. Suppose the payments are only $16,000 each, but they are madeevery six months, starting six months from now. What will thefuture value be if the ten payments were invested at 10 percentannual interest? If invested at BankSouth at 10 percent compoundedsemiannually?
Time Value Analysis - Pensacola Surgery Center Case 12
Cases in Healthcare Finance - Louis C. Gapenski
3. Now consider the surgery centers' goal of having $200,00available in five years to buy new patient billing system.
a. What lump sum amount must be invested today in a CD paying 10percent annual interest to accumulate the needed $200,000?
b. What annual interest rate is needed to produce $200,000 after5 years if only $100,00 is invested?
4. Now consider a second alternative for accumulating funds tobuy the new billing system. In lieu of a lump sum investment,assume that five annual payments of $32,000 are made at the end ofeach year.
a. Waht type of annuity is this?
b. What is the present value of this annuity if the opportunitycost rate is 10 percent annually? 10 percent compoundedsemiannually?
c. What is the future value of this annuity if the payments areinvested in an account that pays 10 percent interest annually? 10percent compounded semiannually?
f. Suppose the payments are only $16,000 each, but they are madeevery six months, starting six months from now. What will thefuture value be if the ten payments were invested at 10 percentannual interest? If invested at BankSouth at 10 percent compoundedsemiannually?
