Final exam Assignment Example | Topics and Well Written Essays - 1000 words - 2

Final exam - Assignment Example The license fee for the facility proposed is $200 plus $50 for each bed up to a maximum of $1,500 upon application for one year and $100 plus $50 for each bed for renewal each year to a maximum of $750 (Texas Department of Aging and Disability Services (n.d.). Therefore, a total of $1,500 would be paid in the first year and $750 each year thereafter until an adjustment is made. The revenue per unit/person is in keeping with rates obtained from Genworth Cost of Care Survey for 2013 which suggest that the minimum, median, and maximum monthly rates are $933, $3,710 and $8,445 respectively for a one bedroom single occupancy assisted living facility in California (Genworth 2013). The information in Table 1 in the Appendix indicates that these rates would result in minimum, median and maximum income per person per annum of $$11,196, $44520 and $101,340 respectively. Table 1 also indicates that 53 single occupancy units would be available for assisted living over the ten year period. If all units were occupied during the year the total annual revenue from this would be $593,388 at its lowest, $2,359,560 at the median level and $5,371,020 – the maximum per annum. An occupancy level of 93% is assumed for year 2 to year 10 for assisted living. ... This could lead to less than expected occupancy levels for the company and thus lead to a significant reduction in projected revenues (See Table 2 in the Appendix for income at various occupancy levels). In terms of wages, the employees of the facility should not be paid lower than Federal of State minimum wage which is $7.25 and $8 respectively (Minimum-Wage.org 2013). The lowest wage rate to be paid by Blueberry Acres LLC is $7.25. Both the Federal and State Minimum wage are expected to increase to $9 by 2014 (Hicken 2013) – a 24% increase in the Federal minimum wage rate projected. In 2016 the State minimum wage is expected to increase to $10 and it is also hoped that the Federal rate will be tied to the inflation rate (Hicken 2013). The interest rate on the construction loan appears to be too high at 7.5%. The prime lending rate is currently 3.25 and is projected to be the same at the end of March 2014 (Financial Forecast Center 2013). The 7.5% projected is more than twice the prime lending rate. Additionally, the projected length of time for the loan may not be allowed to exceed 20 years. This would change the annual payments to $488,746 representing interest payments of $410,787 and principal repayments of $78,051 in the first 12 months. With the exception of vehicle costs and expenses which are assumed to remain constant, the depreciation rate and other expenses appear reasonable. Vehicle costs should increase by at least 3% - the level of inflation anticipated each year. The budget needs to be adjusted for this error. Assessing the reasonability of the construction contract The assisted care facility is a profit making venture and should be