Community Hospital has annual net patient revenues of $150 million, healthcare finance help
Provide detailed descriptions and show all calculations used to arrive at solutions for the following questions
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.
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?