The Thanatos Health System is saving for their future expansion a pre-established Accountable...

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The Thanatos Health System is saving for their future expansion a pre-established Accountable Care Organization, Rest In Peace (RIP).Due to the foresight of Thanatos’ management’s vision, RIP was established 10 years ago and will be expected to go through major restructuring 8 years from now (t = 8).Reorganization costs for institutions today are currently $14,500 a year, but they are expected to increase at a rate of 3.5% a year.Thanatos expects RIP to take 4 years to complete all reorganization once begun. All direct and indirect costs will be due at the beginning of each year of reorganization (at t = 8, 9, 10, and 11).So far, Thanatos has accumulated $15,000 in the reorganization account.Their long-run financial plan is to add an additional $5,000 at the beginning of each of the next 4 years (at t = 0, 1, 2, and 3). Then they plan to make 4 equal annual contributions at the end of each of the following 5 years (t = 4, 5, 6, 7, and 8).They expect their investment account to earn 9%.How large must the annual payments be at t = 4, 5, 6, 7, and 8 to meet RIP's anticipated reorganization costs?

 

Solution ID:565812 | This paper was updated on 26-Nov-2015

Price : $24
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