Mechanisms for Evaluating Financial Health of Health Care Organizations
Future Value of the Ordinary annuity = C x (1+r)n -1)= 10,000 x 5.53= $ 55,300
r
Present Value of conventional securities investment= Cash flows x (1-(1+r)-n)= 70,000 x2.0122= 140,854
Response to the Questions
Question One
The criteria to be employed consists of examining the nature of the annuities to identify the one that best suits the clients business for viable returns.
One needs to consider the tax implication on the returns of the annuity to ascertain the returns comparable to other market options. Another important feature in evaluating the choice of annuity is the interest rates and compare it with other offers in the market to get a premium offer.
The annuities should be examined on the risk factors that are alive in the uptake of a certain annuity package. The regulation and contract terms of the annuity framework are important to ensure it suits the client’s demands and business to avoid lawsuits and losses.
