ABC Hospital invests $5,095,000 in a joint venture with a reputable oncology group and the hospital agrees to a 55% interest in
the joint venture. Based on the estimates, the first year cash flow will be $1,500,000, the second year cash flow will be $3,000,000, the third year cash flow will be $4,500,000, and the fourth year cash flow will be $6,500,000. The expected return of 8.9% is used as the discount rate. Explain which of the two options you would recommend to the CEO. You may only select one option. Support your position and show your calculations. It is essential that you use at least two different financial ratio calculations.
Year Cash Flow Cumulative Cash flow Discounted Cash Flow(8.9%) 0 $5,095,000 $5,095,000 $453,455 1 $1,500,000 $3,595.000 $3,141,5452 $3,000,000 $ 595,000 $141,5453 $4,500,000 ($3,905,000) $3,4515454 $6,500,000ABC Hospital will get ROI in 3 years, this option I would recommend to the CEO.
When Manufacturing of a Product involves several processes.
Explanation:
When several processes are involved in manufacturing a product, costs need to be accumulated in these processing departments. Thus, A process cost accounting system is most appropriate
The relationship between planned investment and interest rates is that investment spending is inversely related to interest rates.
<h3>How are investment spending and interest rates related?</h3>
Investment spending depends on being able to take loans from financial institutions to sponsor capital projects.
If interests rate are high, there will be less planned investments because the cost of taking a loan will be high. The relationship is there inverse in nature.
