Time Value of Money
You are the chief financial officer (CFO) at a community hospital. One of the comments that has come back from patient surveys is the need for a commercial 24-hour pharmacy within the hospital. In this way, patients or their families will be able to fill prescriptions and begin taking ordered medication right away instead of waiting until the following day. The chief executive officer (CEO) wants you to create a proposal for the first 3 months of operation utilizing time value of money tools for the development of this new revenue-generating department. The following points must be covered in your proposal: Include and discuss the need for working capital to include 2 months of startup drug inventory, vendor financing arrangements, personnel costs including salaries and benefits, renovations, disposable supplies, and cost of equipment Provide 2 viable options to measure the rate of return to optimize financial performance of the department based on time value principles with rationale and justification. Include a profitability analysis for 3 years. Include a schedule of assumptions for your proposal. What questions might the board ask regarding feasibility of this proposal? How might current changes in federal, state, and local policies influence decisions to be made?