1. Urban Hospital is considering a contract to provide basic medical services on

Question

1. Urban Hospital is considering a contract to provide basic medical services on location at various corporations in the area. ___The start-up costs to Urban are $125,000, all paid in cash at the beginning of the contract.____ The contract could provide net cash flows of $5,000 per month. _____The contract with the corporations last for three year.___ Urban only invests in projects that earn an annual rate of return of at least 18%. _________________________What rate of return would Urban earn on the contract??___________________ Should Urban accept the contract??_________________________ Why??

Explanation / Answer

the rate of return that urban earn on contract would be approx 13% (12.92) per annum. since the rate of return is less than the usual rate urban accepts, hence it would not accept the contract!!

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.