Planning and Decision Making - 7 1. Your firm reduces its days in receivables from 87 to 67, which generates $3.4 million of new investment funds. Explain why Growth Rate in Equity will increase. (1-2...

Planning and Decision Making - 7

1.
Your firm reduces its days in receivables from 87 to 67, which generates $3.4 million of new investment funds. Explain why Growth Rate in Equity will increase. (1-2 paragraphs)

2.
Assume that a nursing home has two categories of payers.
Medicaid pays $60 per day, and private-pay patients pay the established per diem. However, approximately 10 percent of private-pay charges are not collected.
Variable costs are $45 per day, and fixed costs are expected to be $1 million.
Expected volume is 50,000 patient days.
If 50 percent of the patients are Medicaid, and 50 percent are private pay, what rate must be set to generate $150,000 in profit?


Planning and Decision Making - 7 1. Your firm reduces its days in receivables from 87 to 67, which generates $3.4 million of new investment funds. Explain why Growth Rate in Equity will increase. (1-2 paragraphs) 2. Assume that a nursing home has two categories of payers. Medicaid pays $60 per day, and private-pay patients pay the established per diem. However, approximately 10 percent of private-pay charges are not collected. Variable costs are $45 per day, and fixed costs are expected to be $1 million. Expected volume is 50,000 patient days. If 50 percent of the patients are Medicaid, and 50 percent are private pay, what rate must be set to generate $150,000 in profit?