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Capital Expenditures About Ted Essay

877 words - 4 pages

Ted Jones is the Surgery Unit Director who is getting ready to prepare a capital expenditure funding program for the coming year. His unit is too small and is running at over 90% capacity, so Ted wants more room. On the other hand, a cardiology surgeon at the hospital wants to create a new cardiac surgery program that would require extensive funding for new state-of-the-art equipment. Therefore, the surgeon has been campaigning with the hospital board members (Baker & Baker, 2011). Furthermore, Ted will need valuable information and will need to have a great strategy to prepare the capital expenditure funding program.
Baker & Baker (2011) explains, “Capital expenditures involve the ...view middle of the document...

Along with finding out the total cost of the project, Ted should also consider maintaining costs in the future (Department of Premier and Cabinet, December 2010). Also, Ted should include labor costs and other ongoing operational costs. In addition to computing all financial aspects for the program, Ted must also request for a bond, loan, grant, donations, or other financial resources. Many organizations will first wonder how the program will be financed while reviewing and evaluating the proposal (Baker & Baker, 2011). This shows the board members exactly how much money is needed to fund the program and how the program will be successful.

Finding out the exact financial cost of the project will be very important for Ted when preparing the proposal; however, Ted must ask for the amount of capital available (Baker & Baker, 2011). When Ted finds this out, he will be able to plan accordingly. Baker & Baker (2011) explains, “Most businesses, including those providing healthcare services and products, have only limited amount of capital available for purposes of capital expenditure. It usually becomes necessary, then, to ration the available capital funds” (p.182, para 5). Therefore, Ted must fully explain why he is requesting a capital expenditure, explain the cost of capital to the organization, and consider the return that could be realized on alternative investments (Baker & Baker, 2011, p. 182, para 5). In help Ted figure out the return that could be realized on alternative investments, Ted should produce a cash flow analysis report to show how long it will take to pay off all financial resources. Department of Premier and Cabinet (December 2010) explains, “This should detail council’s ability to...

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