Unit 6: 440 Discussion
Unit 6: 440 Discussion
Discuss the process of capital investment and the importance of capital investment decisions for health care managers today. In the Discussion, use three key terms.
Key Terms
Capital Investment Decision: Business decision involving which long-term assets to buy.
Time line: Graphic representation of time and cash flows.
Project liquidity: Ability of a project to pay for itself from the cash flows that it generates.
Discounted cash flow: Use of time-value-of-money techniques to estimate the value of an
investment.
Compounding: Process of finding the future value of a current amount of series of cash flows.
Discounting: Process of finding the present value of an amount or series of cash flows expected to be received in the future.
Return on investment: Profitability of an investment that can be measured in either dollars or percentage of return.
Post-audit: Feedback process in which the performance of projects previously accepted is reviewed and necessary changes are made.