Question1. Your firm has $45.0 million invested in an accounts receivable, which is 90 days of net revenues. When this value could be reduced to 50 days, what annual raise in income would your firm realize if the raise in cash could be invested at 7.5 percent?
Question2. Your firm’s strategic plan calls for a net raise in total assets of $100 million throughout the next five years, which represents the annual compounded growth rate of 15 percent. Equity growth is also projected to be 15 percent per year. Suppose that the firm’s Total Asset Turnover will average 1.0 in each of the 5 years and Equity Financing percentages will remain stable at 50 percent. The firm projects Reported Income Index values to be 0.85 each year. What is required Total Margin that will make this plan financially feasible?
Use the following information to answer questions 3, 4, and 5: You have been asked to set up a pricing structure for radiology on the per-procedure basis. Present budgetary data is presented below: Budgeted Procedures $10,000 Budgeted Cost $400,000 Desired Profit $80,000 It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38.00 per procedure. Approximately 10 percent of the patients are cost payers. The remaining charge payers are summarized below: Payer Volume % Discount % Blue Cross 20 4 Unity 15 10 Kaiser 10 10 Self-Pay 5 40 50%
Question3. What rate should be set to generate the required $80,000 in profit in preceding example?
Question4. If the forecasted volume increased to 12,000 procedures and budgeted costs rose to $440,000, while all other variables remained constant, what price must be established?
Question5. Suppose that the only change in the original example data is that Blue Cross increases their discount to 20 percent. What price should be set?
Question6. You wish to retire a $10,000,000 bond that can be called in five years for 110 percent of par value, or $11,000,000. You also require making year-end interest payments of $700,000 per year in each of the upcoming five years. If you can invest money at 8 percent, how much money must you set aside today to meet these kinds of obligations?