Question: 1. AlAmal Hospital is expecting its new center to generate the following cash flows:
|
Years
|
0
|
1
|
2
|
3
|
4
|
5
|
|
Initial
investment
|
($30,000,000)
|
|
|
|
|
|
Net operating cash flows
|
|
$6,000,000
|
$8,000,000
|
$16,000,000
|
$20,000,000
|
$30,000,000
|
a. Determine the payback for this new center.
b. Determine the net present value using a cost of capital of 15 percent.Should the project be accepted?
2. Assume a zero coupon Bond with a $1000 Par Value and 15-year maturity, calculate its rate of return if the market price equal $315.240.
3. A tax exempt bond was issued at a 10% coupon bond and a maturity of 15 years. The Par Value of the bond is $1000.
At what required market rate (10%, 5% or 14%) does the above bond sell at a discount? At a premium?