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?

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