Case Study: Rationing Available Capital

Paper Type 1#Critical Thinking
Order Deadline 2019-10-19 18:08:52
Paper Title Case Study: Rationing Available Capital
Subject Area Healthcare
No. Pages 1
Sources 5
Citation APA
Paper Quality Standard
Instructions Consider the following scenario:

A Saudi Arabian hospital bought a new medical laser machine for 2,812,500 Saudi riyals (SAR). The machine will generate a cashflow of 562,500 SAR for six years, which is the expected useful life starting Year 1. The cost of capital is 8 percent. The expected salvage value for each year is shown below:

see the attachment

Using NPV, determine at what year the hospital should dispose of the equipment. Please make certain that you show your calculations. Submit your findings in a proposal to the hospital.      Your proposal should include the following components:      â— A one-page discussion identifying when the equipment should be disposed of based on NPV. â— The calculations of NPV in an Excel spreadsheet which supports your position. You must show all your calculations for credit.




Gapenski, L. C., & Pink, G. H. (2015). Understanding healthcare financial management (7th ed.). Chicago: Association of University Programs in Health Administration and Health Administration Press. ISBN: 9781567937060

â— Chapter 10: Capital Structure in Understanding Healthcare Financial Management  â— Chapter 11: Capital Budgeting in Understanding Healthcare Financial Management

â— Mukherjee, T., Al Rahahleh, N., Lane, W., & Dunn, J. (2016). The capital budgeting process of healthcare organizations: A review of surveys. Journal of Healthcare Management, 61(1), 58-77.

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