Health Development Corporation Case Study Solution Format
Did the purchase of the Lexington Club real estate increase the value of HDC? Use pre-tax cash
flows and assume that the appropriate discount rate for real estate cash flows was 10%.
health development corporation case solution
The net present value for both the scenarios has been calculated that is if the Lexington Real Estate Property is owned by the management of the company or if it is leased. The pretax cash flows for the Lexington Real Estate Property has been used for the period of 20 years which has been assumed as the estimated life of the facility. The discount rate at which the cash flows of the company are discounted is taken as 10%, provided by the question. Further, the revenues for the foreseeable future for the Lexington Club have been assumed to grow at a consistent rate of 5%.
The incremental cash flows resulting from the purchase have been taken. If we examine the operating income of this property, then it could be seen that for the owned and the leased scenario, the lease cost if the only factor which is different and all the other factors are same. The repayment of the interest would not be considered as the cost of operations but it is basically he cost of debt for the company. It has been already accounted for in the 504000 perpetuity outflow. So this amount has also not been included in the pretax cash flows. Based on the net present value that has been calculated for both the options, it could be seen that the present value of owning the Lexington Real Estate Property is much higher than leasing it.
Why does the Lexington Club real estate purchase reduce the offer prices? Does it make sense?
The valuation of HDC performed by TSI is done on the basis of multiples that is (EBITDA*5) - Debt. The EBITDA for the year 2000 has been projected at 5 times and at this multiple the value of HDC has been derived for lease and the owner option, as shown in exhibit 3 of the case. However, we can see that there is a $ 1.87 million difference in the valuations of both the companies. The EBITDA is much larger for owning the Lexington Real Estate Property and it is larger by $925000 at a multiple of 5 which totals $4625000.
Apart from this, the other difference in the leasing and the owning valuation is the cost of buying Lexington of $6500000 into multiple of 5 times less debt. Therefore, it could be seen that this multiple of 5 has a very huge difference over the valuation of both the scenarios. This fixed multiple might not reflect the risk that has been involved. Hence, using different multiples might give some sense to both the valuations. However, based on the current multiple of 5 times it does make sense to reduce the offer price of the Lexington Real Estate Property is purchased.
Will the sale-leaseback of the Lexington Club real estate increase the offer price? How would
you structure the deal?
The ownership of the Lexington Club could be restructured by the company in order to resolve the current real estate problem as stated by the valuations performed by TSI. This deal could be structured in the following way:
HEALTH DEVELOPMENT CORPORATION CASE SOLUTION
A new holding company with any name should be created and the ownership of the Lexington Club would be with that company. That company could then lease the club to HDC. The enw holding company would be completely owned by the stockholders if the company and they would then sell out HDC to TSI. The sale will take place at a value that has been decided by TSI as shown in exhibit 3. Then HDC could lease the property back for a period of minimum 20 years. The lease payment each year would be around $525000. In order for the holding company to purchase this club, a loan could be raised which will have to be paid back in equal payments in a time period of 20 years.
Since, 110% of the bank loan should be the annual payments as stated by the bank, then HDC original owners could inject the difference that would arise between the loan that would be raised and the purchase price of Lexington Club. This way the company could structure this deal and get a much higher offer price by TSI. ..............................
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Health development corporation
At some point in your study of psychology, you may be required to write a case study. These are often used in clinical cases or in situations when lab research is not possible or practical. In undergraduate courses, these are often based on a real individual, an imagined individual, or a character from a television show, film, or book.
The specific format for a case study can vary greatly. In some instances, your case study will focus solely on the individual of interest.
Other possible requirements include citing relevant research and background information on a particular topic. Always consult with your instructor for a detailed outline of your assignment.
What Is a Case Study?
A case study is an in-depth study of one person, group, or event. Much of Freud's work and theories were developed through the use of individual case studies. Some great examples of case studies in psychology include Anna O, Phineas Gage, and Genie.
In a case study, nearly every aspect of the subject's life and history is analyzed to seek patterns and causes of behavior. The hope is that learning gained from studying one case can be generalized to many others.
Unfortunately, case studies tend to be highly subjective and it is sometimes difficult to generalize results to a larger population.
One of the greatest advantages of a case study is that it allows researchers to investigate things that are often difficult to impossible to replicate in a lab.
The case study of Genie, for example, allowed researchers to study whether language could be taught even after critical periods for language development had been missed.
In Genie's case, her horrific abuse had denied her the opportunity to learn language at critical points in her development. This is clearly not something that researchers could ethically replicate, but conducting a case study on Genie allowed researchers the chance to study otherwise impossible to reproduce phenomena.
There are a few different types of case studies that psychologists and other researchers might utilize:
- Explanatory case studies are often used to do causal investigations. In other words, researchers are interested in looking at factors that may have actually caused certain things to occur.
- Exploratory case studies are sometimes used as a prelude to further, more in-depth research. This allows researchers to gather more information before developing their research questions and hypotheses.
- Descriptive case studies involve starting with a descriptive theory. The subjects are then observed and the information gathered is compared to the pre-existing theory.
- Intrinsic case studies are a type of case study in which the researcher has a personal interest in the case. Jean Piaget's observations of his own children are good examples of how an intrinsic cast study can contribute to the development of a psychological theory.
- Collective case studies involve studying a group of individuals. Researchers might study a group of people in a certain setting or look at an entire community of people.
- Instrumental case studies occur when the individual or group allows researchers to understand more than what is initially obvious to observers.
There are also different methods that can be used to conduct a case study:
- Prospective case study methods are those in which an individual or group of people is observed in order to determine outcomes. For example, a group of individuals might be watched over an extended period of time to observe the progression of a particular disease.
- Retrospective case study methods are those that involve looking at historical information. For example, researchers might start with an outcome, such as a disease, and then work their way backward to look at information about the individuals life to determine risk factors that may have contributed to the onset of the illness.
Sources of Information Used
There are a number of different sources and methods that researchers can use to gather information about an individual or group. The six major sources that have been identified by researchers are:
- Direct observation: This strategy involves observing the subject, often in a natural setting. While an individual observer is sometimes used, it is more common to utilize a group of observers.
- Interviews: One of the most important methods for gathering information in case studies. An interview can involves structured survey-type questions or more open-ended questions.
- Documents: Letters, newspaper articles, administrative records, etc.
- Archival records: Census records, survey records, name lists, etc.
- Physical artifacts: Tools, objects, instruments and other artifacts often observed during a direct observation of the subject.
- Participant observation: Involves the researcher actually serving as a participant in events and observing the actions and outcomes.
Section 1: A Case History
1. Background Information
The first section of your paper will present your client's background. Include factors such as age, gender, work, health status, family mental health history, family and social relationships, drug and alcohol history, life difficulties, goals, and coping skills and weaknesses.
2. Description of the Presenting Problem
In the next section of your case study, you will describe the problem or symptoms that the client presented with. Describe any physical, emotional, or sensory symptoms reported by the client. Thoughts, feelings, and perceptions related to the symptoms should also be noted. Any screening or diagnostic assessments that are used should also be described in detail and all scores reported.
3. Your Diagnosis
Provide your diagnosis and give the appropriate Diagnostic and Statistical Manual code. Explain how you reached your diagnosis, how the clients symptoms fit the diagnostic criteria for the disorder(s), or any possible difficulties in reaching a diagnosis.
Section 2: The Intervention
The second section of your paper will focus on the intervention used to help the client. Your instructor might require you to choose from a particular theoretical approach or ask you to summarize two or more possible treatment approaches.
Some of the possible treatment approaches you might choose to explore include:
1. Psychoanalytic Approach
Describe how a psychoanalytic therapist would view the client's problem. Provide some background on the psychoanalytic approach and cite relevant references. Explain how psychoanalytic therapy would be used to treat the client, how the client would respond to therapy, and the effectiveness of this treatment approach.
2. Cognitive-Behavioral Approach
Explain how a cognitive-behavioral therapist would approach treatment. Offer background information on cognitive-behavioral therapy and describe the treatment sessions, client response, and outcome of this type of treatment. Make note of any difficulties or successes encountered by your client during treatment.
3. Humanistic Approach
Describe a humanistic approach that could be used to treat your client, such as client-centered therapy. Provide information on the type of treatment you chose, the client's reaction to the treatment, and the end result of this approach. Explain why the treatment was successful or unsuccessful.
- Do not refer to the subject of your case study as "the client." Instead, use his or her name or a pseudonym.
- Remember to use APA format when citing references.
- Read examples of case studies to gain and idea about the style and format.
A Word From Verywell
Case studies can be a useful research tool but they need to be used wisely. In many cases, they are best utilized in situations where conducting an experiment would be difficult or impossible. They can be helpful for looking at unique situations and allow researchers to gather a great deal of information about a specific individual or group of people.
If you have been directed to write a case study for a psychology course, be sure to check with your instructor for any specific guidelines that you are required to follow.
Gagnon, YC. The Case Study as a Research Method: A Practical Handbook. Quebec: PUQ; 2010.
Yin, RK. Case Study Research: Design and Methods. Sage Publications; 2013.