This paper circulates around the core theme of AHPA 6304 – Assume that you have been asked to place a value on the fund capital together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 59. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
18.5Assume that you have been asked to place a value on the fund capital (equity) of best health, a not-for-profit HMO. Its projected profit and loss statements and equity reinvestment (asset) requirements are as follows (in millions): 2012 2013 2014 2015 2016Net revenues $50.0 $52.0 $54.0 $57.0 $60.0Cash expenses 45.0 46.0 47.0 48.0 49.0Depreciation 3.0 3.0 4.0 4.0 4.0Interest 1.5 1.5 2.0 2.0 2.5Net profit $ 0.5 $1.5 $1.0 $3.0 $4.5Asset requirements $ 0.4 $ 0.4 $ 0.4 $ 0.4 $ 0.4The cost of equity of similar for-profit HMOâs is 14 percent, while the best estimate for BestHealthâs long-term growth rate is 5 percent.a. What is the equity value of the HMO?b. Suppose that it was not necessary to retain any of the operating income in the business. What impact would this change have on the equity value?