Question

Assume that you were deciding between capital investments in a healthcare facility but did not have...

Assume that you were deciding between capital investments in a healthcare facility but did not have a clear view of the cash flow associated with each. What alternative analysis methods might you consider in lieu of cash flow analysis? Identify what you would use and explain your rationale.


The quwstion does not state either one or two capital investments it just states that we are assuming between capital investments and what we could consider if we were deciding between two different investments. Hope that helps?

Homework Answers

Answer #1

When Cash Flows are not available, we can use Income Statement of the firm to look at Healthcare facility's Profitability. EBITDA is a good measure of cash flow of the company. It needs to be adjusted by Capital expenditures and Changes in Working capital. After adjusting these two figures from EBITDA, we will have an estimate of the firm's Cash Flow from Operation activity less any capital expenditure. This information will be sufficient to compare the two healthcare facilities in absence of Cash flows.

Also, we can estimate the income from number of patients handled daily multiplied by average income per patient. This will provide us an estimate of firm's income. We can predict expenses in similar way. This will help us to compute EBITDA as suggested above.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1.Sasha owns two investments, A and B, that have a combined total value of 52,200 dollars....
1.Sasha owns two investments, A and B, that have a combined total value of 52,200 dollars. Investment A is expected to pay 29,700 dollars in 3 year(s) from today and has an expected return of 8.62 percent per year. Investment B is expected to pay X in 6 years from today and has an expected return of 7.58 percent per year. What is X, the cash flow expected from investment B in 6 years from today? 2.Fairfax Paint is planning...
How would you decide between two capital project choices if the different analysis methods (NPV, IRR,...
How would you decide between two capital project choices if the different analysis methods (NPV, IRR, etc.) were pointing to different options? What are the relative strengths and weaknesses of each?  
Assume you are given these mutually exclusive investments with the expected net cash flows as in...
Assume you are given these mutually exclusive investments with the expected net cash flows as in the table: Year Project A Project B 0 -400.00 -670 1 -528.00 210 2 -219.00 210 3 -250.00 210 4 1100.00 210 5 820.00 210 6 990.00 210 7 -325.00 210 Respond to the questions: Question 1: What is each project’s IRR? If each project’s cost of capital were 10%, which project, if either, should be selected? If the cost of capital were 17%,...
The essence of capital budgeting and resource allocation is a search for good investments in which...
The essence of capital budgeting and resource allocation is a search for good investments in which to place the firm’s capital. The process can be simple when viewed in purely mechanical terms, but a number of subtle issues can obscure the best investment choices. The capital-budgeting analyst, therefore, is necessarily a detective who must winnow bad evidence from good. Much of the challenge is in knowing what quantitative analysis to generate in the first place. Suppose you are a new...
You have just arrived at a SnappyPrints Inc., a maker of photo printers.  You are working in...
You have just arrived at a SnappyPrints Inc., a maker of photo printers.  You are working in the Financial Planning department and have joined a team conducting capital budgeting analysis. Snappy is considering two new projects. Project Mini Printer (PMP) and Project High Speed Printer (HSP).  The WACC is 10%.                                    0                      1                      2                      3                                    |                      |                      |                      | Project PMP ($    -150                   40                   75                   100 Project PHS ($)   -150                   65                   75                    85 Answer the following questions: 13.  What are the MIRR’s advantages and disadvantages as compared to the NPV? 14.  What is the payback period?  Find the...
You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of...
You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $11.0 million. Investment A will generate $2.40 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.70 million at the end of the first year, and its revenues will grow at 3.2% per year for every year after that. Which investment has the higher IRR ? Which investment has the higher NPV when the cost of...
You have just arrived at a SnappyPrints Inc., a maker of photo printers.  You are working in...
You have just arrived at a SnappyPrints Inc., a maker of photo printers.  You are working in the Financial Planning department and have joined a team conducting capital budgeting analysis. Snappy is considering two new projects. Project Mini Printer (PMP) and Project High Speed Printer (HSP).  The WACC is 10%. You will need to decide which project should be chosen.  Use Ch11 text and slides as a guide.                                    0                      1                      2                      3                                    |                      |                      |                      | Project PMP ($    -150                   40                   75                   100 Project PHS ($)   -150                   65                   75                    85 Answer the following questions: 9.     What...
13. NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected...
13. NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: Expected Net Cash Flows Year Project A Project B 0 -$400 -$650 1 -528 210 2 -219 210 3 -150 210 4 1,100 210 5 820 210 6 990 210 7 -325 210 Select the correct graph for NPV profiles for Projects A and B.     The correct graph is (select one) graph __? What is each project's...
Review the discussion and discuss whether you agree or disagree with the content and give an...
Review the discussion and discuss whether you agree or disagree with the content and give an example of the direct method: The main difference between indirect and direct cash flow methods is the decision to report all the details or sum them up into one step. Indirect method relies more on accrual accounting which can offer ease of set-up and update opportunities. However, indirect method lacks in offering “a clear picture of cash flows throughout a business” Direct cash flow...
When managing Working Capital, if company leadership employs an Aggressive Asset Mix Strategy, which of the...
When managing Working Capital, if company leadership employs an Aggressive Asset Mix Strategy, which of the following is NOT true regarding that strategy? The strategy will invest excess working capital in less liquid investments than a more conservative strategy Risk will be higher than a more conservative strategy Compared to a conservative strategy, the aggressive strategy is attempting to maximize financial returns on excess working capital The strategy results in higher liquidity than a more conservative strategy Which of the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT