UVa Health System: The LATC Hospital Project Wk 4 is the second of two weeks on CAPITAL BUDGETING Directions (some repeating from Wk3 Assignment Template) 1 Make a quick scan through the LTAC case and the exhibits. 2 Listen to the Intro Audio 3 Cohen Finance Workbook chapter 4 is a review of Time Value of Money, which you covered in a previous course. Review it as necessary, but defer the review until you look at the TVM applications in chapter 5 beginning on p 79. You need to know TVM to understand the capital budgeting metrics of NPV, PI, and IRR. Make sure you have that context in mind before reviewing the TVM chapter 4 (only if you need to). 4 Read the case again, to grasp all the details, especially the Mulroney memo to her boss. 5 To understand how a capital budgeting template works, follow the step-by-step procedure in the book, pages 61-70 6 Scan pages 70-76 on weighted average cost of capital. No need to emphasize at this point because discount rates are given in the case. 7 Read pages 79-84 on NPV, PI, IRR, PP. 8 Pages 83-85 show a worked-out example of a capital budgeting decision. 1 See Q1 tab. Scroll down until you see the questions. Capital Budgeting Template 2 See Q2 tab. Scroll down until you see the questions. K-wacc 3 See Q3 tab. Scroll down until you see the questions. Sensitivity Analysis Expect to revisit these calculations and decisions in Wk7.
