JOHN RAZORBACK was born and raised in Fayetteville, Arkansas.

JOHN RAZORBACK was born and raised in Fayetteville, Arkansas. He obtained his bachelor’s degree in business from The University of Arkansas and a master’s degree in health services administration from UAMS. His first job in healthcare was as a special projects coordinator/financial analyst at a large religious affiliated hospital in Little Rock. He enjoyed his work there, but his ultimate goal was to return to Fayetteville as the manager of a smaller healthcare business, where he would have more responsibility and authority. After five years in Little Rock, John became the chief operating officer of NW Arkansas Surgery Centers, an investor-owned chain of ambulatory surgery centers with six locations in Northwest Arkansas.Immediately after assuming his new position, John faced several decisions. First, the company currently has $100,000 in its cash account, but its target cash balance is only $70,000. Thus, John wants to temporarily invest the excess $30,000 in marketable securities, which typically consist of low-risk, short-term securities such as Treasury bills or money market mutual funds. One alternative that John is considering is to invest the $30,000 in a bank certificate of deposit (CD). CDs are generally available in maturities from six months to ten years, and interest can be handled in one of two ways: the investor (buyer) can receive periodic interest payments or the interest can automatically be reinvested in the CD. In the latter case, the buyer receives no interest during the life of the CD but receives the accumulated interest plus principal amount at maturity. Because the goal of this investment is to accumulate funds for future use, as opposed to generate current income, all interest earned on the CD would be reinvested. Second, the company recently bought a new hardware/software system to handle its patient billings. John expects that the organization will purchase an upgrade from the vendor in about five years. After making some inquiries, John estimates the cost of the upgrade to be $170,000. To ensure that the funds are available to make this purchase, John is planning either to deposit a lump sum today in an interest bearing account or to make annual payments into the same account. Third, NW Arkansas Surgery Centers has some extra space at one of its locations that it might lease out for five years. The initial renovation cost, which includes new flooring and lighting, is estimated to be $50,000. Because of some unusual terms in the proposed lease contract, and also because of a promise to make additional renovations in year three, the net cash inflows expected from the lease follow this uneven pattern:End of Year