health care essay, business and finance homework help

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Pearland Medical Center’s board recently decided to investigate ways to increase revenues. The organization has the benefit of different revenue streams, including patient revenue and returns on investments. Additionally, the Center has just borrowed $1,000,000 on a five-year loan with annual payment term at a 12 percent rate. The first payment will be due one year from now. This assignment has two parts:

Part 1: Amortization Schedule

  1. Construct the amortization schedule for this loan.
  2. How do the interest payment, principal payment, and total payment change when a loan is amortized?

Part 2: Investments

  1. Suppose the board were going to invest in an ordinary annuity requiring a payment of $10,000 over the next five years with an interest rate of 5%. What is the future value of this ordinary annuity investment?
  2. The board is considering other options for investing as well. For example, they want to double their investment of $70,000 over the next 12 years by using conventional securities with a projected return of 6%. Does the present value of the investment indicate that this is possible?
  3. What criteria should you examine in considering annuities? Include the common characteristics of variable annuity and equity-indexed annuity in your response.

Length: 4 pages and a reference page

Paper should include 2-3 creditable references cited inside the paper. Paper is APA fromat and should include links inside the refernce page so that I may check over the work. ALL WORK MUST BE ORIGINAL

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Explanation & Answer

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Running Head: HEALTH CARE ESSAY

1

Health Care Essay
Name
Institution
Date

HEALTH CARE ESSAY

2
Introduction

Pearland Medical Center board is looking for news of generating extra revenues. The center
has other sources of revenues besides revenues from patients. Returns from investments are one
of the other sources of revenue. The board is, therefore, evaluating the best investment to undertake
to increase the revenues. Also, the center has taken a loan amounting to $1,000,000. Therefore,
apart from investment evaluation, the board is also interested in knowing the yearly payment for
this loan including the principal payment and the interest payment. This paper outlines the center
loan amortization schedule, future value of an annuity investment and amount needed if the center
were to invest in conventional securities. It also details criteria that should be examined before
deciding to invest in an annuity.
Loan Amortization Schedule
Loan amortization schedule is a summary of the total payment that is supposed to make
every year and the running balance. The schedule also outlines the yearly principal and the interest
payment (Delaney, Rich & Rose, 2016). Pearland Medical Center took a loan of $1 million at an
interest rate of 12% for five years and the very first payment made after one year meaning the
payments are made annually. Therefore, the annual payment for this loan is $127,409.73 as
outlined in the loan amortization schedule below.
Loan Amortization Schedule
Year Payment

Principal

0

0

1

$277,409.73

Interest
0

Loan Balance

0

$1,000,000

$157,409.73 $120,000

$842,59...


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