Healthcare accounting
Capital Structure – Long Term Debt and Equity Financing (Chapter 17). Briefly discuss the methods used in determining an organizations cost of capital and the value resulting from it.
Part B(a paragraph or 2 each)
- What is the implicit interest rate for an organization that takes a discount of 1/10 N/25 on a $13,000 invoice?
- Discuss the concept of accounts receivable and reimbursement in health care is so complicated. Discuss the concept of the aging of receivables.
- Which project has the better payback period? Project A requires a $25,000 investment and provides $5,000 per year for 6 years; Project B requires an $8,000 project and provides $4,000 per year for 2 years. Explain the strengths and weaknesses of this approach.
- Assume that a not-for-profit company has $20 million of long-term tax-exempt debt with an interest rate of 6.0%. The organization has $3 million of unrestricted net assets, with an estimated cost of capital of 7.5%, and $9 million in an endowment with an estimated 5.0% return on assets (cost of capital). What is its weighted average cost of capital?
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