1. St. Luke’s Convalescent Center has $200,000 in surplus funds that it wishes to invest in
marketable securities. If transaction costs to buy and sell the securities are $2,200 and
the securities will be held for three months, what required annual yield must be earned
before the investment makes economic sense?
2. Your hospital has billed charges of $4,000,000 in February. If your collection experience
indicates that 20 percent is paid in the month billed, 40 percent in the second month, 20
percent in the third month, and 5 percent in the fourth month, determine the following
values:
a) Net patient revenue for February
b) Collections of February charges in February
c) Net accounts receivable at the end of March for February billings