Meredith Becker was born in Charleston, South Carolina, but she traveled upstate to earn a bachelors degree
Question:
Meredith Becker was born in Charleston, South Carolina, but she traveled upstate to earn a bachelor’s degree in business from Clemson University. After graduation, she obtained a job at the Medical University of South Carolina (MUSC) and subsequently received her master’s degree from MUSC’s executive MHA program. After six years at MUSC with a wide variety of successful assignments, Meredith became chief operating officer of Charleston Painless Surgery Center (CPSC), a specialty surgery center owned by six physicians.
Soon after starting at CPSC, Meredith found herself facing a series of decisions involving time value analysis. You are to assume the role of her MHA intern and see how you, with the tools available in Microsoft Excel, can help her with these decisions.
Meredith thinks CPSC’s current computer hardware and software system will need to be replaced in three years at an estimated cost of $500,000.
a. What amount must be currently invested in a CD paying 3 percent annual interest to accumulate to $500,000 in three years? (Hint: Use Excel’s “PV” function.)
b. What annual interest rate will allow a current investment of $450,000 to accumulate to $500,000 after three years? (Hint: Use Excel’s “Rate” function.)