Capital Budgeting Process

The Capital bud shelling process Healthcare Finance DeVry 28 May 2012 Capitol budgeting process: hamper issuance The six steps organizations generally go through out front issuing bonds are: graduation 1. The Healthcare borrower updates crownwork plan, measures debt capacity, and tone-beginning to get its house in order. Step 2 the healthcare borrower selects the key parties involved in the bond issuance. Step 3 the Healthcare borrower is evaluated by credit rating agency. Step 4 the Bond is rated by the credit rating agency (CRA) such(prenominal) as Moodys, Standard and Poor or Fitch. Step 5 the healthcare borrower enters into a loan agreement for governmental authority, the issuer of the bonds. Step 6 the underwriter sells the bonds to bondholders that the public offering price, and the trustees return the healthcare provider with the net proceeds. Bonds can be issued with every fixed rate or variable rate interests, to each one of which has advantages and disadvantages. Leasing An alternative to traditional equity and debt financing is leasing. Leasing is undertaken for a issue forth of reasons: 1.) To stave off the bureaucratic delays of capital budget request 2.) To avoid technological obsolescence 3.) To receive better maintenance services 4.

) To deed over for convenience. Sometimes rather than buying the capital asset healthcare organizations will acquire capital assets. In the case of long-run non-cancelable contracts, leased buildings or equipment, the healthcare organization has made a commitment to make payments in the future. This commitment is treated as a form of long-term financing, and is referred to as a capital lease. 1.) A capital lease- also called a financial lease and which the lessor aims to lease the asset for virtually all of the economic life. In return, the lessee is committed to lease payments for the duration the lessee has the item. The essential point of financial lease agreement is that it contains a condition whereby the lessor agrees... If you want to get a full essay, order it on our website: Orderessay

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