Posted: October 24th, 2019

Financial Homework Assignment

Question description

University of Detroit Mercy
HSA 5020
Winter 2016
Second Graded Homework Assignment
25 Points
This
assignment requires calculations therefore it is required to be submitted in
Excel with all calculations performed in Excel. The material covered in this
exercise is from chapter 9 and 14.
In
this assignment will require you to calculate Future Values (FV), Present
Values (PV), Net Present Values (NPV) and Internal Rates of Return (IRR).
In addition please include a heading to
your Excel file that includes: 1) Organization/entity/class identification 2)
Description of the document 3) Date. (One point)
You
want to retire in 25 years with $1,000,000 in your retirement account. How much
do you need to put into an investment account today that earns 8% annually so
that you have $1,000,000 in in 25 years? (Three points)You
have just inherited $25,000. Instead of spending it you decide to save it and
give it to your nephew when they turn 21 years old. They are 5 years old today.
How much will the nephew receive when they turn 21 assuming a 6% annual interest rate? (Three points)ABC
Home Care rents a copy machine of $250 per month. You find that you can purchase
the same model copy machine for $3,600 but will have to pay $100 to maintain
the machine. Calculate the payback period. (Two points)You
operate a surgery center in in Franklin. One of the surgeons suggestions that
the foot surgery be added a service offered. After investigation you make the
following estimates of what it would take to establish podiatric surgery as a
services at the surgery center:New equipment for these procedures
$80,000The surgeon will do 7 procedures a monthYou can charge $1,500 per procedure and
insurance will pay $1,000 per procedureSupplies for each procedure cost $400For each procedure additional staff will
be required at a cost of $250 per procedureThe equipment has a 4 year useful lifeThe surgery center uses a 12% discount
rateExpenses are expected to increase 3%
each year and insurance payments are expected to increase 1% each year. Build a cash flow projection for each
year of the 4 years (like we did in class – see example on page 507 of the
textbook). (Six points)Once you have the cash flow analysis
built calculate the NPV and IRR. Should the surgery center add foot surgery as
a service? Why or why not? (Five points)Based on discussions with the staff you have
determined that the only way to staff these procedures is to pay the staff
overtime so the staff pay is increased by 50%. Recalculate the NPV and IRR.
Does this change your response to if the foot procedures should be added as a
service to the surgery center? (Five points)

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