1. Johnson decides to put 5% of his salary into his retirement plan in addition to the amount put into the plan by his employer. Find the total annual contribution into the retirement plan. 1. 2. Johnson decides to invest his retirement funds in a mutual fund with global stocks that he hopes will yield 8% per year. Find the future value in his account after 12 years. 2. 3. Assume the Mayo Clinic has exactly 55,000 employees and that the average salary per per- son including physicians is $87,300 per year, which includes the cost of health insurance paid by the emplover. Estimate the annual pavroll. 3.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
icon
Related questions
Question
**Mayo Clinic Overview**

**History and Expansion:**
- **1889:** Founded in Rochester, MN
- **1987:** Expanded to Jacksonville, FL
- **2016:** Over 50,000 employees
- **2018:** More than a million patients

**About Mayo Clinic:**
The Mayo Clinic is the world's largest integrated, not-for-profit medical group practice, with main facilities in Minnesota, Arizona, and Florida. It is recognized as one of the leading hospitals globally. The clinic’s mission is focused on people:

*To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education, and research.*

**Case Study: Darnell Johnson**
After obtaining a two-year degree in radiation therapy and accumulating three years of experience at a small hospital, Darnell Johnson began working at the Mayo Clinic with a salary of $63,500. The clinic contributes 6% of his salary to his retirement plan and allows him to contribute an additional 5% of his salary.

**Exercises:**

1. **Retirement Contribution Calculation:**
   - Johnson decides to put 5% of his salary into his retirement plan in addition to the contribution by his employer. Find the total annual contribution into the retirement plan.

2. **Investment Growth Estimation:**
   - Johnson decides to invest his retirement funds in a mutual fund with global stocks expected to yield 8% per year. Calculate the future value in his account after 12 years.

3. **Annual Payroll Estimation:**
   - Assume the Mayo Clinic has exactly 55,000 employees, with the average salary per person, including physicians, being $87,300 per year (including health insurance costs). Estimate the annual payroll.
Transcribed Image Text:**Mayo Clinic Overview** **History and Expansion:** - **1889:** Founded in Rochester, MN - **1987:** Expanded to Jacksonville, FL - **2016:** Over 50,000 employees - **2018:** More than a million patients **About Mayo Clinic:** The Mayo Clinic is the world's largest integrated, not-for-profit medical group practice, with main facilities in Minnesota, Arizona, and Florida. It is recognized as one of the leading hospitals globally. The clinic’s mission is focused on people: *To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education, and research.* **Case Study: Darnell Johnson** After obtaining a two-year degree in radiation therapy and accumulating three years of experience at a small hospital, Darnell Johnson began working at the Mayo Clinic with a salary of $63,500. The clinic contributes 6% of his salary to his retirement plan and allows him to contribute an additional 5% of his salary. **Exercises:** 1. **Retirement Contribution Calculation:** - Johnson decides to put 5% of his salary into his retirement plan in addition to the contribution by his employer. Find the total annual contribution into the retirement plan. 2. **Investment Growth Estimation:** - Johnson decides to invest his retirement funds in a mutual fund with global stocks expected to yield 8% per year. Calculate the future value in his account after 12 years. 3. **Annual Payroll Estimation:** - Assume the Mayo Clinic has exactly 55,000 employees, with the average salary per person, including physicians, being $87,300 per year (including health insurance costs). Estimate the annual payroll.
### Exercises on Financial Contributions and Calculations

4. **Calculate Annual Contributions:**
   - Use the annual payroll to estimate the annual contribution the Mayo Clinic must make into:
     - (a) FICA (Social Security) and Medicare, which is 7.65% of all wages.
     - (b) The retirement plans of all employees.
   - **Answer Spaces:**
     - (a) ____________________
     - (b) ____________________

5. **Determine Total Labor Costs:**
   - (a) Find the total labor costs by adding the amounts in Exercises 3 and 4 above.
   - (b) Write the number using words. It is evident that the Mayo Clinic requires a substantial amount of revenue to pay employees, not considering the costs of buildings, equipment, supplies, etc.
   - **Answer Spaces:**
     - (a) ____________________
     - (b) ____________________

6. **Calculate Present Value of a Donation:**
   - The Mayo Clinic saved the life of a wealthy entrepreneur who had cancer. He decided to donate $400,000 per year for the next 5 years to the hospital. Find the present value of this gift, assuming a 6% interest rate per year.
   - **Answer Space:**
     - 6. ____________________

7. **Funding for New Building:**
   - Managers have decided to build a new building in 7 years and will need $47,400,000. The chief financial officer (CFO) decides to fund this cost by making contributions into a sinking fund at the end of each 6-month period. Find the payment needed every 6 months if the funds earn a 5% interest rate per year.
   - **Answer Space:**
     - 7. ____________________
Transcribed Image Text:### Exercises on Financial Contributions and Calculations 4. **Calculate Annual Contributions:** - Use the annual payroll to estimate the annual contribution the Mayo Clinic must make into: - (a) FICA (Social Security) and Medicare, which is 7.65% of all wages. - (b) The retirement plans of all employees. - **Answer Spaces:** - (a) ____________________ - (b) ____________________ 5. **Determine Total Labor Costs:** - (a) Find the total labor costs by adding the amounts in Exercises 3 and 4 above. - (b) Write the number using words. It is evident that the Mayo Clinic requires a substantial amount of revenue to pay employees, not considering the costs of buildings, equipment, supplies, etc. - **Answer Spaces:** - (a) ____________________ - (b) ____________________ 6. **Calculate Present Value of a Donation:** - The Mayo Clinic saved the life of a wealthy entrepreneur who had cancer. He decided to donate $400,000 per year for the next 5 years to the hospital. Find the present value of this gift, assuming a 6% interest rate per year. - **Answer Space:** - 6. ____________________ 7. **Funding for New Building:** - Managers have decided to build a new building in 7 years and will need $47,400,000. The chief financial officer (CFO) decides to fund this cost by making contributions into a sinking fund at the end of each 6-month period. Find the payment needed every 6 months if the funds earn a 5% interest rate per year. - **Answer Space:** - 7. ____________________
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Similar questions
Recommended textbooks for you
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Business in Action
Business in Action
Operations Management
ISBN:
9780135198100
Author:
BOVEE
Publisher:
PEARSON CO
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.