Question

Introduction: In the greater Seattle-Tacoma area, an arms race continues between hospitals to gather the most modern technology available to use on their patients - currently this arms race's primary device of choice-robotic surgical systems. Why robotic surgical systems? These systems in theory allow surgeons to be more precise in performing complex surgical procedures on patients. With greater precision comes a greater chance of successfully healing the patient as well as reducing the patient's possibility for complications and recovery time. In addition to these benefits, hospitals through the use of superior technology can serve more patients and potentially reap greater benefits from insurance companies and patients for these advanced medical services The price of this superior care though comes at a cost to the patient increased charges) as well as purchase costs to the hospital. One of the most popular robotic systems is called da Vinci and is manufactured and sold by Intuitive Surgical (http://www.intuitivesurgical.com/). The da Vinci was FDA approved in July 2000 and can currently perform urologic, gynecologic, colorectal, head and neck, cardiothoracic, and other general surgery procedures. As important as the device is the surgeon that is trained in the use of the system. The more repetitions on the robotic system, the more skillful the surgeon becomes Depending on the options that a hospital chooses to purchase, the cost of a da Vinci system can range between 1 million and 3 million dollars with the associated sales taxes. As with all surgical instruments, there are also disposable items needed during a surgery associated with equipment-specifically the da Vinci which must also be purchased. These items range from $1,000 to $3,000. Finally, as with many pieces of Page 1 of 8

Answer 1

In this Question I had assume that in final Hospital had select the Capital Lease method & On that basis only I had writen the Final Journal entry in the bookes of Hospital
I unat is the annual rate of interest being charge to the total hospital 2 The total interest Paid over the entire termiff of the lease. wurd e lease terisin - 36 months. ut i mine Has Lease payment - $6874210 nonton parnase price $1.900000,00 1 7 UNT 1) Total amount paid for lease period i 36 X 6 942-10 $.247.4715 pla ،- . ، ا وا ا . - srpanel i Total interest paid a $51GAS 6 Erlij Interest Ratelt P.Ariz 5147 156 10o Pront o ) 19 DO ODD Total interest Rate For F 30.2grant & Interest Rate P.A=1.30.25. 10-08-10 2) Givent this Rate of interest y que giver some reason on iuny or why not the I hospital should accept this lease contralt Is this good deal for the release. ? I think yes Hospital should go for the leage: nag the interest at 10.081.pa. -If the hospital think, to tay paranase a Maaninery they reanired to take a loan from Bank and the interest rate of the Bank loan will be higher than the 10.00

ahju the duration of Bank loan is also more than the lease period t o the Bank loan idea may result in higher interest Payment for the Hospital so I think Hospital should go for lease Planso entot ung wokilda Hospita) care wheter it was a Capital lease or an operating lease? unen would one be an advantaget over the other ? co z trompe The main difference between operating lease and capital tease is the the operating His like renting lease means unen the neare period is over we need to give back the assett But in capital lease the whon the lease period finished its stay at The company lowered that assets, its stay on the Balance sheet 50 The Hospital docare if its a capital lease or operating lease. LT The operting lease is useful unen. The company needs a Asset for specific duration only after the work hish they don't reanire that asset. - The capital lease is use full when in production a vital role 1 the assetr Prags unen the leare A fa com pang because Company period finish the asset stays with and they may use that in long run

2 Gal given the new situation How does that affect question 1-3,9 w would your tanswer different tandung. Bol tool yes, the new situation may affecte question I as it will impact the interest rate tare po ir titron sblinow lease term= 36 months low wome ist ll payment = $0.00 f nuto set 12th payment on = $68742.10 I Poronare price = $igoo, ooo. solt Total payment = 68.762.1 X 25 3 817 18552.5 * Note - we had multiply by 825 because it rol legyent are con i priglud NT to Total interest amount = 17185525, 1900ooo = $611947.5), a interest Rate (9.9 . pa = €181497.5) 1900ODO pas (9.4 / Elinterest Rate 63013) - Pa. The answer for zand 3rd question remuns. the same. ENDOL PRI roo

Dale Page If the contract were signed, unat could be to the first journal outons entered by the hospital que linat will be final Journal entry pentered by the hospit alat any I unat under wina i principat would explain ang they are would a same or diff orent 2 is The first entry Book by Hospitan is lo Na Po lease expense pri Istizon tom Tolcash ro armato e Note- Hospital will book the 615+ Journal entry on. 12th installment as they didn't pay ang thing on the installment is final entry Book by Hospital is o machines onne ant To cashrom scral lotion u p ii The fint First and final entries are different because we assume that Hospital had consider the capital lease and in capital lease after the complition of reare payment Hospital will tak owned the assets