Fargo Memorial Hospital has annual net patient service revenuesof $14.4 million. The hospital’s pati

Fargo Memorial Hospital has annual net patient service revenuesof $14.4 million. The hospital’s patient accounts manager estimatesthat 10 percent of third party payers pay on Day 30, 60 percent payon Day 60, and 30 percent pay on Day 90. a. What is Fargo’s averagecollection period? (Assume 360 days per year throughout thisproblem.) b. What is the firm’s current receivables balance? c.What would be the firm’s new receivables balance if a newlyproposed electronic claims system resulted in collecting fromthird-party payers in 45 and 75 days, instead of in 60 and 90 days?d. Suppose the firm’s annual cost of carrying receivables was 10percent. If the electronic claims system costs $30,000 a year tolease and operate, should it be adopted? (Assume that the entirereceivables balance has to be financed.) Please show all formulasand calculations used to derive the answers. Thank you. . . .

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