1. If a physician deposits $24,000 today into a mutual fund that is expected to grow at an annual rate of 8%, what will be the value of this investment:
What is the future value factor for each?
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 $120,000 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%
What is the present value factor for each?
3. The Forbes OBGYN group purchased a new diagnostic machine for their office for $900,000. The expected cash flows for each year of the five year period is $120,000, $155,000, $186,000, $208,000, and $225,000 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.