Analyzing the Healthcare Finance Issue Essay

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Healthcare Finance

What is the difference between simple interest and compound interest?

Simple interest is gauged on the basis of the loan's principal amount while the compound interest is derived on the basis of the principal amount and also the accumulated interest. Simple interest has been attained when one multiplies the principal amount with both interest rate as well as the payment period with in a loan. On the other hand, compound interest is derived when one multiplies the principal amount with one and add the resulting figure with the annual interest rate, which is elevated to the figure of compound periods subtracted by one (Horngren et al., 2012).

What is the formula for determining the future value of an amount?

The formula for calculating the future value of an amount is as follows:

Future Value = Present Value x (Future Value factor for n = number of years, i = certain percentage)

What is the future value of $10,000 for an interest rate of 16% and 1 annual period of compounding?

10,000 x ((1 + 0.16)1) = $11,600

For an annual interest rate of 16% and 2 semi-annual periods of compounding?

10,000 x ((1 + 0.16)4-1)

10,000 x ((1 + 0.16)3)

= $15,608.

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For an annual interest rate of 16% and 4 quarterly periods of compounding?

10,000 x ((1 + 0.16)16-1)

10,000 x ((1 + 0.16)15)

= $92,655.21

4. Define an annuity

An annuity is defined as a fixed or predetermined amount of money that is paid to an individual every year, more often than not for the rest of his or her life.

5. In the future value annuity table at any interest rate for 1 year, why is the future value interest factor of this annuity equal to 1.00?

The values in the future value annuity table are generated by the formula:

FV = $1 ((1+i)^n - 1)/i if n = 1, that comes to be

FV = 1( 1+i)^1-1)/i

= 1( 1+i - 1)/i

= i/i

6. Explain the difference between a joint venture and a merger

A merger is a transaction where two companies come to the agreement to incorporate their operations in a rather co-equal manner for the reason that they have resources and capabilities that together might generate a stronger competitive advantage. On the.....

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