Shawn Guzman is wondering whether he made the right decision four years ago. As the president of Guzman Health Care Services, he acquired a hospital specializing in elder care with an initial cash investment of $1,400,000. Mr. Guzman would like to know whether the hospital’s financial performance has met the original investment objective. The company’s (required rate of return) for present value computations is 14 percent. Expected and actual cash flows follow:
Required
Round your financial figures to the nearest whole dollar.
a. Compute the of the expected cash flows as of the beginning of the investment.
b. Compute the of the actual cash flows as of the beginning of the investment.
c. What do you conclude from this post audit?
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