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##### The chief financial officer of a home health agency needs to determine the present

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text.;The chief financial officer of a home health agency needs to determine the present value of a \$120,000 investment received at the end of year 20. What is the present value if the discount rate is;4 percent?;6 percent?;8 percent?;10 percent?;Erie General Hospital wants to purchase a new blood analyzing device today. Its local bank is willing to lend it the money to buy the analyzer at a 2 percent monthly rate. The loan payments will start at the end of the month and will be \$2,600 per month for the next eighteen months. What is the purchase price of the device?;Upon the untimely and tragic death of their wealthy uncle, his heirs wanted to memorialize him with a named donation to the local hospital. They offered the hospital a choice of \$60,000 annual payments forever or a lump sum payment of \$700,000 today;What should be the decision if the hospital thinks it could earn an average of 5 percent annually on this donation?;What should be the decision if the hospital thinks it could earn an average of 9 percent annually on this donation?;What should be the decision if the hospital thinks it could earn an average of 13 percent annually on this donation?;Darby Hospital is borrowing \$81 million for its medical office building. The annual interest rate is 4 percent. What will be the equal annual payments on the loan if the length of the loan is four years and payments occur at the end of each year?;A wealthy philanthropist has established the following endowment for a hospital. The details of the endowment include the following;A cash deposit of \$19 million one year from now.;An annual cash deposit of \$14 million per year for the next fifteen years. The first \$14 million deposit will be made today.;At the end of year 15, the hospital will also receive a lump sum payment of \$26 million.;Assuming the cost of money is 4 percent, what is the value of this endowment in today?s dollars?;Holy Spirit Hospital is reviewing the details of several bank loans. Bank A offers a nominal rate of 6 percent compounded semiannually. Bank B offers a nominal rate of 6 percent compounded quarterly. Bank C offers a nominal rate of 6 percent compounded monthly. What is the effective rate of each loan, and which loan should the hospital accept?

Paper#27827 | Written in 18-Jul-2015

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