Bradley Beauvais Accounting and Finance for Healthcare Managers CSU Global Campus HCM 301, textbook is Gapenski & Pink (2015), excel math problems

Please complete the four math problems below.9/1/14UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENTChapter 6 — Debt FinancingPROBLEM 1Assume Venture Healthcare sold bonds that have a ten-year maturity, a 12 percent coupon rate withannual payments, and a $1,000 par value.a. Suppose that two years after the bonds were issued, the required interest rate fell to 7 percent. What would be the bond’s value?b. Suppose that two years after the bonds were issued, the required interest rate rose to 13 percent. What would be the bond’s value?c. What would be the value of the bonds three years after issue in each scenario above, assuming that interest rates stayed steady at either 7 percent or 13 percent?ANSWERUNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENTChapter 6 — Debt FinancingPROBLEM 3Tidewater Home Health Care, Inc., has a bond issue outstanding with eight years remaining to maturity,a coupon rate of 10 percent with interest paid annually, and a par value of $1,000. The current marketprice of the bond is $1,251.22.a. What is the bond’s yield to maturity?b. Now, assume that the bond has semiannual coupon payments. What is its yield to maturity in this situation?ANSWERUNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENTChapter 6 — Debt FinancingPROBLEM 5Minneapolis Health System has bonds outstanding that have four years remaining to maturity,a coupon interest rate of 9 percent paid annually, and a $1,000 par value.a. What is the yield to maturity on the issue if the current market price is $829?b. If the current market price is $1,104?c. Would you be willing to buy one of these bonds for $829 if you required a 12 percent rate of return on the issue? Explain your answer.ANSWERUNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENTChapter 9 — Cost of CapitalPROBLEM 5Morningside Nursing Home, a single not-for-profit facility, is estimating its corporate cost of capital. Itstax-exempt debt currently requires an interest rate of 6.2 percent, and its target capital structure callsfor 60 percent debt financing and 40 percent equity (fund capital) financing. The estimated costs ofequity for selected investor-owned healthcare companies are given below:Glaxo Wellcome15.0%Beverly Enterprises16.4%HEALTHSOUTH17.4%Humana18.8%a. What is the best estimate for Morningside’s cost of equity?b. What is the firm’s corporate cost of capital?ANSWER