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


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