Module 4: Introduction to the Capital Analysis Tool powered by Kaufman Hall
Key Model Input Parameters Continued
Amount to be Financed
Amount to be Financed - Using the same investment categories from the previous screen, you will need to indicate which, and how much of each investment, will be financed. The model will assume 100% financing unless you change the data points. This will be used to calculate the amount of annual interest and other costs associated with borrowing money for this project. Remember: Interest expenses shows up as a line item on the Income Statement and does impact cash flow
Currently, the model will calculate interest payments per year as a straight loan structure (not a lease structure). In most hospitals, the Finance division usually controls the method of financing. Therefore, be sure you know your organization’s thinking on the way it generally acquires its fixed assets. These methods could include cash payment, bond debt, as well as taxable or non-taxable leasing.
Financing Assumptions - Your Finance department will be able to tell you borrowing length (by policy) for your institution and their usual borrowing “loan” rate. You can also get typical “loan” rates from your GEHFS representative. This rate should be adjusted based on your institution’s credit rating.
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