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Nelda Suffered a Serious Stroke and Was Admitted to a Nursing

question 111

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Nelda suffered a serious stroke and was admitted to a nursing home for 140 days. Nursing home charges, including physician fees and other related expenses were $33,000. Under Nelda's long- term care insurance contract, she received reimbursements of $36,000. How much of the $36,000 reimbursement must be included in Nelda's gross income in 2018?


Definitions:

Net Cash Flow

Net cash flow is the total amount of money being transferred into and out of a business, particularly in reference to the amount of liquidity.

Economic Value Added (EVA)

A method used to measure a firm’s true profitability. EVA is found by taking the firm’s after-tax operating profit and subtracting the annual cost of all the capital a firm uses. If the firm generates a positive EVA, its management has created value for its shareholders. If the EVA is negative, management has destroyed shareholder value.

Net Operating Profit After Taxes (NOPAT)

A company's operating profit after adjusting for taxes, useful for comparing the profitability of businesses.

Weighted Average Cost of Capital

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted, used to assess the cost of funding new projects.

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