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)

1. What is the implicit interest rate for an organization that takes a discount of 1/10 N/25 on a $13,000 invoice?
2. Discuss the concept of accounts receivable and reimbursement in health care is so complicated.  Discuss the concept of the aging of receivables.
3. 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.
4. 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?