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Healthcare Financial Management and Economics Week 10 Assignment Capital Budgeting -

There are many options to buy capital, including cash purchases, loans, leasing, and other forms of payment. Your goal as a healthcare manager is to determine which method is best for your organization, given its financial and organizational structure (i.e., for-profit or not-for-profit). Time value of money and net present value are two techniques that may help you determine how and when to invest in new capital. For this Assignment, you examine these concepts as they pertain to the healthcare industry. Use the Week 10 Assignment Capital Budget Excel Template to show your work, answer the following questions:

1. If a physician deposits $19,000 today into a mutual fund that is expected to grow at an annual rate of 8%, what will be the value of this investment: a. 3 years from now b. 6 years from now c. 9 years from now d. 12 years from now.

2. The Chief Financial Officer of a hospital needs to determine the present value of $140,000 investment received at the end of year 5. What is the present value if the discount rate is: a. 3% b. 6% c. 9% d. 12% .

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Kritika Krishnakumar
Kritika KrishnakumarLv10
28 Sep 2019

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Related questions

(Please Summerize the work down below, thank you)

Political

Economic

Growing political influences on healthcare advances

Cost of living increases

Global government influence on healthcare cost

Cost of insurance prices

Government control of Medicaid, Medicare funding

Rise of forecasted interest rates

Social/Cultural

Technical or Technology

Increase average age of population

Demand on new medical treatments

Patient expectations increase

Customize treatments

Demographics are in constant change

More advance service facilities

Environmental

Legal

Growing need for green business

Constant change of government drug

Regulations

Environmental agenda and community awareness

Consumer laws

Health and safety regulations

Porters 5 forces of business model

Competitive Rivalry

Growth opportunity for healthcare companies are expected to growing the next few years

Increase in new revolutionary drugs both in and outside of the US

Threat if New Entrants

Strict government regulations

Difficult to keep up due to constant change

Huge startup cost

Substitute Products

Threat of other substituting product and service at lower cost

Bargaining Power of Customers

Generic drugs offered at large discount to consumer

Larger less customized healthcare facility with lower housing costs

Several facilities offering similar services.

Bargaining power of supplier

Medical suppliers have a large pricing power

Bargaining power of physicians and nurses is huge because of large hospital benefits

Swot Analysis

Strengths

Highly trained and capable employees

Market experience

Strong leadership

High level of organizational efficiency

Excellent facilities

Strong commitment to bettering the community

Weaknesses

Increased cost of healthcare could lower our clientele

Limited staff resources

Limited cash flow to hire and train new employees

Lack of resources

Opportunities

Fast growing technology opens new doors for using state of the art equipment to better serve the patients.

Nursing and residential care is one of the fastest growing industries

Aging population

Threats

Uncertainty in political and economic climate causes hesitation for receiving new patients.

Funding constraints

Highly competitive market

Product or Service Analysis

Our services will be used by patients who cannot afford experimental treatments and patients who have been abandoned by the system because hospitals can no longer provide medical assistance. At our facility, we will be able to work with the families and provide them with different payments options, such as low monthly payment plans. Our main goal is to be able to treat the patient at a very affordable cost; however, if any patient does not possess the means to pay for treatment, he or she would not be turned away; our facility will tap into government and private funding to cover treatment cost.

The beauty of this service is that there isn’t a charge of any kind to take part in our program because it is completely funded by government grants. Individuals that would take part would more than likely not have the means to pay a monthly deductible. Due to the nature of the business listed as a non-profit agency, there is no way to make a profit of any kind, as it would jeopardize the business in its entirety.

Some of the market factors that create a demand for our services include the need of medical care after having maximized all resources, the number of low income families, and the number of patients facing health issues needed extended medical care.

Opportunities that may derive from this business is the opportunity to expand and open multiple facilities, while extending a helping hand to many more in need. The risk, however, is the unstable funds deriving from grants. This can pose a huge treat to the business, as grants often times come and go and cannot be counted on as a constant income.

After studying the healthcare system and current policies in place, data shows many individuals facing severe health issues usually go untreated and uncared for due to the outrageous cost of medical care. It is devastating to see how often people, especially the elderly, are sent home and forgotten for the mere reason that hospitals and doctors are not willing to care for patients without financial means. In fact, in 2009 Harvard news reported 45,000 annual deaths due to lack of health coverage in the U.S. alone, which is significantly higher than the 18,000 reported by USA Today in 2002.

Financial Analysis

Clermont will be a nonprofit organization, dedicated to help the most needed. To open the facility fully operational we must take in consideration some fixed expenses like the land acquisition, permits, interest, brokers, administration fees, professionals (facility setup), staff, reports (environmental, occupational, fire, FDA), electricity, water, phone, water & sewer , connections, taxes, insurance, management, security, advertising, accountants, food, lawn mowers, bank fees, etc.

The facility will need have a total value of approximately three million dollars, but if we break the price of the land acquisition in to a thirty (30) year mortgage we can star up the business with an investment of approximately $ 233,944.61 USD to cover the first month of operation including all the startup permits and connections. After the first month the fixed expenses will be $184,444.00 USD with the exception of the months were taxes are due; taxes are around $ 43,000.00 USD paid quarterly will increase the tax month (depending on the facility fiscal year) for $ 10,750.00 USD approximately. We will fund all the costs with private and public funding, fundraiser, events, raffles, and most important with the help of the community.

As we mentioned before, Clermont is a nonprofit organization and we will do everything in our power to give the relief to the families in need. No one will be rejected because they do not have the money or the insurance cannot help. No money will be required from patient and every single dollar received will be spent in the patients, and in improving our facility and our service every day.

We believe our financial even breaking point will be a year after we begin operations, and be profitable soon after. There are many patients in need, and with the government and public grants each person will receive the treatment they need, and we will become the hope of many.

The traditional U.S. auto industry (the Big Three) has struggled for many years against competition from foreign-owned automobile companies. Their struggle was dramatically heightened in 2008 with the world-wide credit crunch and economic slowdown.

Automakers came to Washington in late 2008 asking for federal financial aid to avoid bankruptcy and possible liquidation. Their reception was chilly, but after heated debate, General Motors and Chrysler were granted government loans and loan guarantees. Ford Motor Company decided to rescind its request for government aid in order to avoid the conditions placed upon the proffered loans. At present, Ford and General Motors are profitable again; Chrysler continues to struggle but is making some economic headway. As part of the conditions placed upon the economic assistance, Chrysler is now controlled by Fiat.

1. Should the U.S. Government (which means, the U.S. taxpayers) have aided the automobile industry? Why or why not? As part of your discussion, keep in mind that the U.S. already has another successful automobile manufacturing industry, but it is not centered in the north of the country. Toyota, Honda, Daimler-Benz, and others have manufacturing plants in the South that, although impacted by credit crunches and recessions, have done well while the Big Three struggled.

2. What policy towards the automakers should we pursue? Should government leaders have provided outright grants to struggling automakers; what about more loans or loan guarantees? Should we have stood back and let the market determine which companies stood or fell? Should we have encouraged mergers, and, if so, based on what criteria?

3. Concentrate on using your managerial economics knowledge, tools, and concepts to weigh the pros and cons of the alternative paths the government could follow regarding domestic automakers. Make your arguments as a trained economist able to rationally analyze a vexing problem. Support your positions with the wealth of material in this week's assigned reading.

Hello, I am working on an assignment related to Harley-Davidson Motorcycles. After reading the article below, please complete the 3 questions at the end.

Harley-Davidson Wheels Out an Electric Bike; Hog Maker Aims for Younger Riders With Electric-

Motorcycle Test

Harley-Davidson Inc., known for gasoline-powered motorcycles thundering with machismo, is testing a battery-powered model that it hopes will appeal to younger people concerned about the environment.

"We'd like to get customer feedback," Matt Levatich, Harley's president and chief operating officer, said in an interview, adding that the product is at least two years away from being offered for sale. For now, he said, the lithium-ion batteries in prototype models have a range of roughly 100 miles between recharges under typical riding conditions. They can go from zero to 60 miles an hour in "just under four seconds," he said.

The Milwaukee-based company said on Thursday that "select consumers" around the country next week will start getting a chance to ride prototype cycles with rechargeable batteries.

Harley wouldn't be the first to offer such a motorcycle. Companies including Zero Motorcycles Inc., Brammo Inc. and Mission Motorcycles Inc. now sell battery-powered motorcycles, and bigger manufacturers are experimenting. BMW AG sells a battery-powered scooter, dubbed the C evolution, in Europe. So far, said Harley's Mr. Levatich, sales of electric motorcycles are "insignificant."

"We anticipate it's going to appeal to a younger, more urban demographic," a Harley spokesman said. The company said the test was part of a goal of "preserving the riding environment."

The company still hasn't decided whether or when to put such motorcycles on the market and is looking for feedback from bike owners before proceeding further, he said. The project, dubbed LiveWire, has been in the works for four years, he said.

Chris Narayanan, 39, said he is curious about the battery-powered bike. "I'd give it a try if I had the opportunity," said the New York resident. For now, though, he is having fun with his 1998 Harley Sportster 1200 and plans to upgrade to a bigger Harley in a few years. "It's an interesting gamble for Harley. I know they want to appeal to younger riders and get them into Harley."

Justin Massey, general sales manager for a Harley-Davidson dealership in Hammond, Ind., thinks the sporty, racing-bike styling and first-of-its-kind status for Harley will attract an audience on its tour of dealerships. "I'm sure it will create quite a buzz," said Mr. Massey, who doesn't know if his dealership will be on the tour. "It's a good-looking bike and people will want to be around it."

Rather than the rumbling sound of traditional Harleys, the new machines sound more like a jet engine, only much quieter, Mr. Levatich said.

The project wasn't launched in response to environmental regulations, he said. Rather, current technology allows the company to produce a battery-powered cycle and "we feel we should," Mr. Levatich added.

James Hardiman, an analyst for Longbow Research, called the project a surprise. "It's a pretty big departure from anything they've ever done," he said and should help Harley appeal more to a younger and more environmentally conscious crowd.

Initially, "you're not going to get very far from one charge," he said, but battery technology is going to get "a whole lot more efficient in the years to come."

For people who don't already ride motorcycles, Harley promised to offer a "simulated riding experience" rather than a road test. Experienced riders will be invited for highway rides.

In recent years, Harley has striven to reduce its reliance on ageing white male baby boomers and appeal more to young people, women and minorities. As part of the company's strategy, two new bikes, known as the 750 and 500, are being rolled out. These smaller bikes are aimed at younger riders, who might find a traditional Harley touring bike too large or heavy to handle, particularly on crowded city streets.

The company didn't release a possible price for the LiveWire. High costs and limited range have kept demand low for battery-powered cars so far.

Harley-Davidson is the dominant U.S. supplier of heavyweight motorcycles. For this year's first quarter, the company reported that its share of sales in the U.S. market for new motorcycles with engines of 601 cubic-centimetres displacements or greater was 56%.

(Please use detail in answering each question below. And also please use the information in the article above to answer the three questions below).

1. Please segment the consumer market for motorcycles in the US using a needs-based segmentation strategy.

2. For each needs-based segment, determine which demographics, life-styles, and usage behaviors make the segment distinct and identifiable (actionable by marketers).

3. Based on the information in the article and your own research, determine the overall attractiveness and profitability of each segment.

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