Healthcare finance – Capital Budgeting and Allocation

Capital Structure Decisions (100 points)

Consider the following scenario:

Don't use plagiarized sources. Get Your Custom Essay on
Healthcare finance – Capital Budgeting and Allocation
Get an essay WRITTEN FOR YOU, Plagiarism free, and by an EXPERT!
Order Essay

XYZ Health Organization has a division that currently uses zero debt financing. Assume that the operating income (EBIT) is 1,000,000 SAR. Assume that the firm has 5,000,000 SAR in Assets with an equal amount in equity (because it currently has no debt). The firm wants to expand its product offerings and is considering replacing half of its equity financing with debt financing at an interest rate of 8%. The corporate tax rate is 20%. Assume that you are the Chief Financial Officer of the organization.

Determine how the new capital structure would impact the firm’s net income, total dollar return to investors, and ROE?
Conduct the analysis again but assume that the cost of debt has risen to 15%?
Then using the original 8% interest rate, assume that annual EBIT has dropped to 500,000 SAR or could go as high as 1.5 million SAR (both with a probability of 20%). While there is a 60% chance that EBIT will remain 1,000,000 SAR. Redo the analysis for each level of EBIT and determine the expected values for the division’s net income, total dollar return to investors, and ROE.

After you have conducted all the calculations, make recommendations to the company as to which avenue the company should take. Consider what you have learned about the healthcare needs under SV2030 as well as your knowledge of the healthcare industry.

Discuss the considerations for risk and return for western investors who will be entering into Islamic financing arrangements. How will those investors consider the risk of this business endeavor?

Issue sukuk for the debt financing (make calculation in accordance with the principles of debt financing so that you may conduct the financial analysis).
Using equity for financing and some borrowing (your project would be financed in accordance with Murabaha principles but for the convenience of calculations, you will use the processes of a conventional loan and/or issuing equity in the organization).

Make recommendations to the organization as to the course of action that they should follow considering all risk factors. Please make certain that you show your calculations. Submit your findings in a proposal to the hospital.

You must show all your calculations for credit. Your calculations for this assignment must be submitted as an Excel file, identified as Appendix A, and included as part of the Word document submission.

Your paper should meet the following structural requirements:

The paper should be 4–5 pages in length, not including the cover sheet and reference page.
The paper should be formatted according to APA and Saudi Electronic University writing standards.
Provide support for your financial statements with in–text citations from a minimum of four scholarly articles.
Two of these sources may be from the class readings or textbook, but the others must be external and come from peer–reviewed journals.
The Saudi Digital Library is a good place to find these references.

You are strongly encouraged to submit all assignments to the Turnitin Originality Check prior to submitting them to your instructor for grading. If you are unsure how to submit an assignment to the Originality Check tool, review the Turnitin Originality Check Student Guide.

iWriteHomework
Order NOW for a 10% Discount
Pages (550 words)
Approximate price: -

Why Us?

Top Quality and Well-Researched Papers

All ourbpapers are written from scratch. In fact, Clients who ask for paraphrasing services are highly discouraged. We have writers ready to craft any paper from scratch and deliver quality ahead of time.

Professional and Experienced Academic Writers

Our writers keeps you posted on your papers progress - providing you with paper outline/draft. You are also at liberty to communicate directly with your writer.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time, in many cases quite ahead of time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:
$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

Essays

Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.

Admissions

Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.

Reviews

Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.

Reviews

Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.