IDENTIFICATION Biden Smith, DOB 21/05/1931, Nil known allergies. SITUATION For

This Assignment aligns to the NCHL domain of Health System Awareness & Business Literacy. Specifically, it focuses on the fourth level of the Financial Skills Competency: “Uses Financial and Needs Analyses to Inform Investment Decisions.” For more information on how this icon aligns to the NCHL Health Leadership Competency Model 3.0, refer to the MHA Iconography page. Healthcare Financial Management and Economics Week 10 Assignment — Capital Budgeting There are many options to buy capital, including cash purchases, loans, leasing, and other forms of payment. Your goal as a healthcare manager is to determine which method is best for your organization, given its financial and organizational structure (i.e., for-profit or not-for-profit). Time value of money and net present value are two techniques that may help you determine how and when to invest in new capital. For this Assignment, you examine these concepts as they pertain to the healthcare industry. To prepare for this Assignment: Review this week’s Learning Resources. Reflect on concepts of time value of money, net present value, internal rate of return, and purchasing options. The Assignment: Use the “Week 10 Assignment Capital Budget Excel Template” to show your work, answer the following questions: 1. If a physician deposits $44,000 today into a mutual fund that is expected to grow at an annual rate of 8%, what will be the value of this investment: a. 3 years from now b. 6 years from now c. 9 years from now d. 12 years from now 2. The Chief Financial Officer of a hospital needs to determine the present value of $230,000 investment received at the end of year 5. What is the present value if the discount rate is: a. 3% b. 6% c. 9% d. 12% 3. Ford Hospital plans to purchase a new MRI machine for 1.5 million. The expected cash flows for each year of the five year period is $330,000, $460,000, $495,000, $510,000, and $560,000 for the five years. What is the internal rate of return or the IRR for the project? 4. Determine the Net Present Value for Problem 3 with an interest rate of 10%. Do you proceed or not with the project? 5. Determine the Payback Period for Problem 3. There are many options to buy capital, including cash purchases, loans, leasing, and other forms of payment. Your goal as a healthcare manager is to determine which method is best for your organization, given its financial and organizational structure (i.e., for-profit or not-for-profit). Time value of money and net present value are two techniques that may help you determine how and when to invest in new capital. For this Assignment, you examine these concepts as they pertain to the healthcare industry. Resources Getzen, T. E., & Kobernick, M. S. (2022). Health economics & financing (6th ed.). Wiley. Chapter 11, “Financing and Ownership of Healthcare Providers” (pp. 207-227) Pink, G. H., & Song, P. H. (2020). Gapinski’s understanding healthcare financial management (8th ed.). Health Administration Press. Chapter 4, “Time Value Analysis” (pp. 105-146) Chapter 6, “Debt Financing” (pp. 191-237) Chapter 10, “Capital Structure” (pp. 359-404) Abitbol, J., Munir, A., How, J., Lau, S., Salvador, S., Kogan, L., Kessous, R., Breitner, L., Frank, R., Kucukyazici, B., & Gotlieb, W. H. (2020). The shifting trends towards a robotically-assisted surgical interface: Clinical and financial implicationsLinks to an external site.. Health Policy and Technology, 9(2), 157-165. https://doi.org/10.1016/j.hlpt.2020.03.003 Eramo, L. (2021). 40% of hospitals reconsidering traditional budgeting amid pandemic: HFMA pollLinks to an external site.. HFM (Healthcare Financial Management), 75(3), 40-43. Garthwaite, C., Ody, C., & Starc, A. (2022). Endogenous quality investments in the U.S. hospital marketLinks to an external site.. Journal of Health Economics, 84. https://doi.org/10.1016/j.jhealeco.2022.102636 Holcomb, A. J., & Smith, D. G. (2020). Hospital capital budgeting during a public health crisisLinks to an external site.. Journal of Health Care Finance, 46(4), 23-35. https://healthfinancejournal.com/index.php/johcf/article/view/217 Mukherjee, T., Al Rahahleh, N., & Lane, W. (2016). The capital budgeting process of healthcare organizations: A review of surveysLinks to an external site.. Journal of Healthcare Management, 61(1), 58-76. https://doi.org/10.1097/00115514-201601000-00011 Rosales, C. R., Magazine, M. J., & Rao, U. S. (2020). Dual sourcing and joint replenishment of hospital suppliesLinks to an external site.. IEEE Transactions on Engineering Management, 67(3), 918-931. https://doi.org/10.1109/TEM.2019.2895242 Document: How to Calculate NPV and IRR (PDF)Download How to Calculate NPV and IRR (PDF) Document: Net Present Value, Accounting Rate of Return, Internal Rate of Return, and Payback to Make Investment Decisions (PDF)Download Net Present Value, Accounting Rate of Return, Internal Rate of Return, and Payback to Make Investment Decisions (PDF) Document: Week 10 Assignment Capital Budget Excel Template (Excel spreadsheet) To prepare for this Assignment: Review the Week 10 Assignment document provided to you by the Instructor. Reflect on concepts of time value of money, net present value, internal rate of return, and purchasing options. To assist you with this task, a Present and Future Values Excel Tutorial has been added to this week’s Learning Resources. Please check your volume settings upon opening. By Sunday Submit the following: Complete the “Week 10 Assignment Capital Budget Excel Template” by answering the questions provided in the template. Refer to the Week 10 Assignment Rubric for specific grading elements and criteria. Your Instructor will use this grading rubric to assess your work.

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