Prepare the following answers based on the above scenario and table. Create separate
tables to show your answers.
1. Determine the total variance associated with the planned and actual expenses.
2. Prepare a flexible budget of expenses at 30,000 patient days.
3. Determine the “Spending Variance” which is defined as actual costs less costs budgeted at
actual volume.
The following questions come from Chapter 18. Please respond in complete sentences.
4. What is the difference between simple interest and compound interest?
5. Why is a dollar today worth more than a dollar received in the future?
6. Does the n in the formula (1+i)n always mean compounding on an annual basis?
7. How should the interest rate and n periods of compounding be modified if compounding for
less than one year?
8. What is the future value of $10,000 for an interest rate of 16% and 1 annual period of
compounding?
o For an annual interest rate of 16% and 2 semiannual periods of compounding?
o For an annual interest rate of 16% and 4 quarterly periods of compounding?
HCA 630 – Costs, Budgets, and Annuities Assignment Instructions 2
9. From your findings in the previous problem, explain why the investment increases in value
when the number of compounding periods increases.
10. What is the relationship between the present value factor and the future value factor?
11. What happens to the present value factor as the discount rate or interest rate increases for
a given time period?
12. Define an annuity and provide an example.
13. Define an ordinary annuity and provide an example.
14. Learning objective 4 in Chapter 18 states, “Calculate the future value of an amount and
annuity.” What is meant by “future value of an amount and annuity”?
