Effectively gather financial and market information to guide strategic decision making and improve patient outcomes.
Interpret financial and market information to guide strategic decision making and improve patient outcomes.
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To prepare for the meeting, create a summary of the yields of each bond by completing the table shown in Exhibit 14.2. Remember that the YTM of each bond is assumed to be the required rate of return of each bond and that the semiannual YTM must be multiplied by two to get the stated (nominal) YTM.
The Chair comments that the 15-year and both 25-year bonds are callable five years from today at $1,050 and asks you for the yield-to-call on each of the three bonds.
Finally, the Chair states that most bond market analysts believe that interest rates will remain at the 10 percent level for the next several years. She asks you whether Pacific should consider calling any of its bonds and why. (Hint: No additional calculations are required.)
PLEASE USE MEMORANDUM FORMAT AS SHOWN IN LINK BELOW (With Excel attached seperately)
Pacific Healthcare is an investor-owned hospital chain that owns and operates nine hospitals in Washington, Oregon,
and Northern California. Marcia Long, a recent graduate of a prominent health administration program, has just been
hired by Washington Medical Center, Pacific’s largest hospital. Like all new management personnel, Marcia must
undergo three months of intensive indoctrination at the system level before joining the hospital. Marcia began her
indoctrination in January 2018. Her first assignment at Pacific was to review its latest annual report. This was a stroke
of luck for Marcia because her father owned several bonds issued by Pacific, and she was especially interested in
whether her father had made a good invest- ment. To glean more information about the bonds, she examined Note E
to Pacific’s consolidated financial statements, which lists the company’s long-term debt obligations, including its first
mortgage bonds, installment contracts, and term loans. Exhibit 13.1 contains information on four of the first-mortgage
bonds listed in Pacific’s annual report. All four bonds pay interest semiannually. (For more information on bond
ratings, see Standard & Poor’s website at www.standardandpoors.com or the Moody’s Investors Service website at
www.moodys.com.) Pacific’s chief financial officer, Hugo Welsh, found out about Marcia’s interest in the firm’s debt
financing. “Because you are so interested in our financial structure,” he said, “I want you to do the bond valuation and
make a presentation to our executive committee.” Hugo then asked Marcia to perform the calculations required to
complete exhibit 13.2 and to think about some of the questions that members of the committee might ask her about
APA 7th Edition (American Psychological Assoc.)
George Pink. (2018). Gapenski’s Cases in Healthcare Finance, Sixth Edition: Vol. Sixth edition. Health Administration
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