Problem:
You were selected as the new Chief Executive Officer of OHC Medical Center, a 600-bed hospital in the suburbs of a city with a population of over 1.5 million. The hospital board recently decided to investigate ways to increase revenues. The facility has the benefit of different revenue streams including patient revenue and money from investments.
The hospital recently sold property for $100,000. The hospital board wants to invest $50,000 at 5% in an ordinary annuity and receive annual payments of 10,000 over the next five years. What is the future value of this ordinary annuity investment?
The board is considering other options for investing the remaining money. They want to double their investment of $50,000 over the next 10 years by using conventional securities with a projected return of 8%. Does the present value of the investment indicate that this is possible?
What is the future value of this ordinary annuity investment?
Does the present value of the investment indicate that this is possible?
Your job is to provide an answer to both questions.
Restate the scenario in your response
Identify the key components (PV, FV, i, n)
Present the results as part of your response to these questions.