Finance simulation Research Paper Example | Topics and Well Written Essays - 500 words

Finance simulation - Research Paper Example Time and resources will be used meritoriously. Tapering the agency staff reduces cost and saves on premiums paid to the workers. Option 2 was originally used to repay the loan. The interest rate of the option is low (9.0%) and will thus allow EHC to have more funds. However, it was not the preeminent alternative since interests accrued and added onto the principal amount, and everything was to be recompensed after 6 months. Later option 1 was realized to be better since it resolved the cash flow problem and its compensation period was not limited. The US machine, X-ray, and CT scanner, all needed to be replaced. The organization decided to purchase a refurbished CT scanner since its productive life is high and can be upgraded upon its expiry. The X-ray machine was purchased through a capital lease since the machines productive life is 15 years that is comparatively high. The US machine was acquired through an operating lease since the option offers low installments payment, upgrading option, and lower upfront payment. Productivity of the assets was perceived to be more important than ownership. The HUD 242 proved to be better than all the other strategies and was, therefore, chosen. It offered a greater NPV. The simulation indicates that despite the higher insurance cost of HUD 242, the uncertainties associated with the investment are minimal and suitable for the project. A cost-benefit analysis further proved that HUD 242 was indeed appropriate. Tax-exempt bonds were incongruous since the funds were to be used within three years while the planned completion period of the expansion was four years. It could have left a big chunk of WIP (work in progress) (Aiken et al., 2002). All choices were potentially fatal. Management relies on the current available information and the knowledge, exposure, and experience of the