Community Hospital has annual net patient revenues of $150 million, healthcare finance help

Science

Provide detailed descriptions and show all calculations used to arrive at solutions for the following questions

1.

Community Hospital has annual net patient revenues of $150 million. At

the present time, payments received by the hospital are not deposited

for six days on average. The hospital is exploring a lockbox arrangement

that promises to cut the six days to one day. If these funds released

by the lockbox arrangement can be invested at 8 percent, what will the

annual savings be? Assume the bank fee will be $2,000 per month.

2.

St. Luke’s Convalescent Center has $200,000 in surplus funds that it

wishes to invest in marketable securities. If transaction costs to buy

and sell the securities are $2,200 and the securities will be held for

three months, what required annual yield must be earned before the

investment makes economic sense?

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