1. ABC Hospital decides to acquire 50 new beds, which cost $10,000 each. What is
ID: 2635569 • Letter: 1
Question
1. ABC Hospital decides to acquire 50 new beds, which cost $10,000 each. What is the most efficient financing approach for the hospital to take?
a. Bill Medicare for $500,000 by increasing room charges by $100 per day.
b. Start a capital campaign to raise $500,000 in donations.
c. Issue $500,000 in 10 year notes at 5%.
d. Lease the beds for 5 years under an operating lease for $75,000 per year (paid annually in arrears) with a residual value of $200,000 with an option to enter a conditional sales contract at $45,000 per year (paid annually in arrears) for 5 years.
Explanation / Answer
d. Lease the beds for 5 years under an operating lease for $75,000 per year (paid annually in arrears) with a residual value of $200,000 with an option to enter a conditional sales contract at $45,000 per year (paid annually in arrears) for 5 years.
Beds cost per bed Total cost 50 new beds 10,000 500,000 d. lease option: lease 75,000 residual value 200,000 conditional sale (45,000) net inflow 230,000 cash outlfow (500,000) Net cashlflow (270,000)Related Questions
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