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Health Care Time Value of Money

In 2010 Lilliputian County Hospital's total patient revenues were $15 million. In 2019 patient revenues are expected to be $30 million. What is the compound growth rate in patient revenues over this time period?
Shawnee Valley Family Practice Center plans to invest $30,000 in a money market account at the beginning of each year for the next five years. The investment pays 8 percent annual interest. How much would this investment be worth after five years of investing?

Midstate Medical center is starting an endowment fund to pay for the expenses of a medical research program. The expenses are $1,000,000 per year, and the program is expected to last ten years. Assuming payments are made at the end of each year and the interest rate is 8 percent per year, what should be the initial size of the endowment?

Goldfarb Cancer Research Institute just received a $3 million gift to cover the salary for a permanent research scientist in perpetuity to study Hodgkin's disease. What would be the required rate of return on the investment if the position paid an annual salary of: a. $75,000 per year? B. $100,000 per year? C. $125,000 per year?


Solution Summary

This solution illustrates how to determine the growth rate of an investment, the rate of return required to attain a certain goal, the future value of a lump-sum, and the present value of a perpetuity.