1. The monthly interest rate should be 2%. It can be obtained by using this formula on excel: =RATE(36,-68742.1,1900000). In this case, 36 is the number of payments, 68742.1 is the amount paid per month and 1900000 is the purchase price. This is obtained based on the information given from http://annuitypayment.blogspot.com/2012/01/calculating-interest-rates-with.html.
2. I believe that it is not a good deal for the lessee. The hospital should not accept the lease contract since the yearly interest rate of 24% is simply too big. I believe the normal interest rate of equipments range from 6% to 12%. If the hospital accepts the contract, it would have to pay additional interest expense which is larger than the usual interest expense. Therefore, I believe that purchasing the equipment outright is a better decision if they have a sufficient capital.
3. Based on ASC 840, it should be an operating lease. It was mentioned that there is no transfer of ownership to the lessee at the end of lease period which is why it is considered operating lease. Since the lessee does not assume the risk of ownership, the lease expense is treated as an operating expense in the income statement and the lease does not affect the balance sheet.
4. As it was aforementioned, if it was an operating lease, it would be treated as an expense which will end up being in the income statement. This lease expenses would reduce net income, thus potentially reducing a company's income tax expense and rates. Moreover, operating leases create off-balance sheet financing because no liability is recorded on the balance sheet since no asset is recorded. The result is the company would display to its debt lenders better debt covenant ratios.
5. The new interest rate is -4.878...
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...s, the company would gain profits.
9. The monthly payment for the new lease is $57,856.78. Please refer to the excel spreadsheet to view the formula used. This is done by using the information provided in http://www.nhboa.org/archives/loan_payment_calculator.html
10. Please refer to the excel spreadsheet for the answer of this question. Please note that the data given on the Q10&11 sheet are converted into annual basis.
11. Please refer to the excel spreadsheet for the answer of this question.
12. It is not very profitable investment. The hospital might gain a lot of revenue through this investment. However, the revenue it gains is too little to cover the monthly payment for the new lease. Not to mention, the net present value is negative. This is not acceptable because its rate of return will be less than 12%.
13. Please refer to the word document “Question 13.”
...ived charity donations, and because of this EMC have survived with effective investment returns. In order for EMC to remain open, they will need to search for the best loan opportunities to generate more revenue, since they are in a good standing to be eligible for a loan. With competition quickly making leeway, Emanuel Medical Center cannot continue to survive with donations alone. EMC needs to generate more revenue to stop spending its profits on prior investments. The negative operating margins have basically left the hospital in a very bad financial situation, and it will not and cannot improve until different services are offered.
Supposedly, the national average occupancy rate of hospitals is lower than it should be because of rising costs of hospital care. Factors causing variations in occupancy rates are hospital size, product diversification, and urgent versus non-urgent
This plan is being questioned prospectively- in terms of its future effects. Positively, the goal of providing a range of quality service is practical. The pediatrics unit is costing the hospital a lot of money to maintain. With closing it down, the money and resources can be allocated to another unit or another service within the hospital. For instance, take into consideration the many hospitals in the Los Angeles area: White Memorial Hospital, Keck Hospital of USC, Huntington Hospital, etc. Having many hospitals with their various services offer a lot of choices for the patient, but is it really necessary? Furthermore, the competition between hospitals can be seen as to who offers the most services, because they can garner the most patients, which in turn makes more profit. Patient safety is not put at risk if the unit is closed, since there are other hospitals who offer the same service. The second objective is the effect on the resident doctors who are trying to specialize in pediatrics of the hospital. This objective would be hard to reach if the unit gets closed, because they would not be able to get their clinical experience. It should also be factored in that there is a shortage of doctors and that doctors are not allocated/distributed equally; this problem would be heightened even more once the unit is
General Practice Affiliates, due to its current financial situation, can benefit from a lease agreement with Titus Lake Hospital. Titus Lake Hospital is a financially stable business partner. General Practice Affiliates will retain management rights, but the volume of patients will increase. The downside for General Practice Affiliates is that a new electronical medical records system must be purchased. Financing for the new system should come from a variety of sources.
For-profit hospitals have owners and issue stock to those owners to reflect their equity position (Williams & Torrens, page 185). For-profit hospitals are not just accountable to the community but must also provide a return on investment to the shareholders; they expect to generate a profit to pay a return to the equity investors for their capital (Williams & Torrens, page 186).... ... middle of paper ... ...
Vehicle depreciation also varies with a purchase or a lease. If someone is buying, the tax deduction will equal the full depreciation of assets per the I.R.S. schedule. If leasing it is optional to buy out the lease at the end of the term, rather than go by the I.R.S. schedule. With buying, the finance period can extend beyond the warranty period, unless warranty options are added. In contrast, with leasing, the warranty will last for the full term of the finance period no matter what.
When leasing a vehicle, you can get more bang for your buck; meaning more features, and amenities from a higher trim level. The monthly payments are typically lower because you’re only paying for the depreciation of the vehicle during the specified lease term, and not the actual sales price. *** For example, on a $40,000 car, you’d finance the entire $40,000 purchase price with a car loan—with a car lease, you only pay a percentage of that. The car’s residual value is what the vehicle is expected to be worth at the end of the lease. The residual value is taken from the purchase price and the difference is what you make payments on. So if the car’s residual value is 55 percent after three years, for example, that means the $40,000 car would be valued at $22,000 at the end of the lease. The lease payments would be calculated based on the remaining $18,000 and not the full $40,000, along with interest, taxes and fees.
Regarding tenant improvements, David Merrell, COO of North Forest Office Space, articulates “The more time and money you invest in your landlord, the more time and money a landlord will invest in you. That is, in order to secure the proverbial “riskless” long-term lease, the landlord is more willing to assist the tenant with improvements to the space. The only caveat to this rule thumb is that landlords are less willing when inventory is low and absorption rates high. Likewise, smaller and mid-sized businesses may not be in a position to sign a lease longer than five years, resulting in such firms being required to pay for their own renovations.
principle balance at 22.50% interest while paying $32.71 a week for 208 weeks (4 years) will cost a total amount of $6,803.68. That is over $2,000.00 in
The coded years (0-7) will be placed in the X ranges representing the independent variable. With this model the first cell title will also be included. The Excel QM provides the analysts with the simple linear regression analysis as seen in FIGURE 1-3.
An alternative to traditional equity and debt financing is leasing. Leasing is undertaken primarily for what purposes?
The continuing value for the residual earnings was determined by taking 2010s projected residual earnings and multiplying it by 1 plus
In many cases, landlords are now prepared to offer tenants better regear incentives, mainly in the form of rent-free or cash premiums, as there is a more marked increase to the value of their investment through extending lese terms to good covenants. In addition, the advantage for landlords of keeping their options open at lease expiry for redevelopment has reduced as in many cases the market rents have fallen to a level that does not justify redevelopment.
Both facilities will have the same Medical Director and one Director of Nursing running both locations. Management personnel will improve their communication by meeting once a week to discuss and brainstorm ideas; bill verification will be consistent in the two facilities; there will be a company wide purchasing system. To maximize revenues, there has to be a mix of out- patients and in patient care, there will be shorter stays in the future.
The details regarding the amount you will pay in service charges should have been detailed to you prior to moving in. However, if you are unsure of what you are paying for check your lease or speak with your freeholder. Either should be able to clarify the following: