Recruiting doctors can sometimes be difficult and this would be an advantage for Trinity Community Hospital. Mortgage payments will be very similar to leasing payments, the difference being that a mortgage will eventually be paid off. Building their own orthopedic service line will allows for the hospital to have complete control over the future of the orthopedic service line. A1b. Buying Advantages The other options available to Trinity Community Hospital (TCH) is buying a freestanding building near the current property owned by the hospital.
negative 2500 $.The company needs to raise about 40,000 $ as the ending cash balance for the month of July is negative 40,000 $. The Company can get a short term loan for 40,000 $ which can be repaid in October. 2. Even though the Company started with a Capital of 250,000 $ it still ends up with a zero bank balance. This is because the increase in the collections of Accounts Receivable from customers is not sufficient to recover the total disbursements (variable production cost and the fixed cost).
CalPERS vs. JC Penney Overview CalPERS investment program began on February 22, 2000 when they included JC Penney on their annual Focus List. CalPERS further exclaimed that due to declining sales and a deteriorating customer base they had lost confidence in Penney’s management. Subsequent to the release of their focus list JC Penney made numerous strategic decisions to revitalize and boost the value of the company. Penney forced their current CEO James Oesterreicher to retire. Next instead of promoting from within, they searched for new blood and hired former Barney’s CEO Allen Questrom.
* Risk premium: using the geometric mean from 1926 to 1999 might be problematic, since the risk premium of recent decades is obviously lower than earlier (stated in the lecture). So we think a range of 3% to 5% is more reasonable. * Cost of Debt: Joanna’s calculation is based on the items on the income statement. However, when calculating cost of debt, we should consider the opportunity cost rather than the accounting cost. We should perceive the opportunity cost as the return investors will expect to earn somewhere else when accepting similar risk.
No, because the yields for treasury instruments are very low at the time, so the premium the company will add to their rate is very low, and the investors will get less money for the same level of riskiness, so the paper is not really cheap. YTMs for these 4 issues are the following: 2013 notes: 0.93% 2015 notes: 1.72% 2020 notes: 3.06% 2040 notes: 4.56% c. The YTM is differing from the coupon rate because these notes are selling at a discount price. The YTMs should be compared with the coupon rate. d. Microsoft issued 4 papers instead of one is because risk diverse, with only 1 paper there is a great risk for them, what if people do not want to buy the type of paper they issued, with the 4 papers people can get different options, some people want long term paper and some people want short term paper. Microsoft can decrease the risk of losing with 4 papers.
The second strategy was a relative value trade; convergence was expected but not guaranteed except perhaps over a very long horizon. LTCM sold options with a long maturity that corresponded to a strong volatility (20%), while dynamically hedging the position; LTCM would have no exposure to the corresponding equity index. In fact, the S&P 500 has had a much lower volatility in the past (13%) and was expected to come back to historical volatility, which would reduce the relative value of the options sold in the beginning, therefore LTCM would be able to make a profit. b. Explain the circumstances of the LTCM’s collapse, and why the strategies presented in part a) failed.
The firm is currently having problems cost effectively meeting run length requirements as well as meeting quality standards. The general manager has proposed the purchase of one of two large six-color presses designed for long, high-quality runs. The purchase of a new press would enable LI to reduce its cost of labor and therefore the price to the client, putting the firm in a more competitive position. The key financial characteristics of the old press and the two new presses are summarized in what follows. Old press – Originally purchased 3 years ago at an installed cost of $400,000, it is being depreciated under MACRS using a 5-year recovery period.
As the retailers incur virtually no costs by changing suppliers it is easy for them to play them against each other to get better terms. This negative effect is heightened by high supplier volume. As discount retailers account for a large percentage of their revenue, suppliers don’t have strong negotiating power. Power of Buyers – Low-Medium Purchases are not a large part of total income which
So we can interpret that in the year 2013, the risk of the firm is getting lower as the ratio goes down. As the definition says that higher the ratio, greater the ability of the firm to pay its bills. This tells that Coca-Cola is not really improving their liquidity and efficiency, because their current ratio dropped from the previous year. As of September 29, 2013, and September 30, 2012, the Company had a weighted average interest rate of 6.1%, 5.9% and 6.1%, respectively, for its outstanding debt and capital lease obligations. The Company’s overall weighted average interest rate on its debt and capital lease obligations was 5.8% for YTD 2013 compared to 6.1% for YTD 2012.
Harold Holmes, the new banker in charge of the Reed account requests to see company books and after examining what Reed presented, decided to deny the increase in the Reed credit line. Additionally, Reed owes the bank in excess of $100,000 which Holmes has requested payment within 30 days. Holmes suggested changes Reed could make to make his business profitable again and be able to stay on top of debt. These changes included hiring a consultant to overlook the financial and inventory aspects of the business, and reducing inventory and account receivables to the industry average. Upon reviewing the balancer sheet, Holmes suggested accounts receivable being considerably reduced, since this was an area which was controllable.