A firm has daily cash receipts of P100,000. A bank has offered to reduce the collection time on the firm’s deposits by three days for a monthly fee of P500. If money market rates are expected to average 5% during the year, the net annual benefit (loss) from having this service is
Q: You just inherited some money, and the end of each year for 20 years. You could earn 5% on your mone...
A: Data given:: PMT(Annuity) = $16800 i= 5% n= 20 years nper= 20 Required:: Amount you should pay fo...
Q: Agarwal Technologies was founded 10 years ago. It has been profitable for the last 5 years, but it h...
A: D1 = D2 = 0 D3 = $0.25 D4 = $0.475 D5 = $0.689 Growth rate (g) after this = 8% forever r = 11%
Q: Money borrowed today is to be paid in 8 equal payments at the end of each quarter. If the interest i...
A: Quarterly payment (Q) = P 37291 n = 8 payments r = 1% per annum = 0.25% quarterly
Q: wn borrowed RM5 000 from a bank on 30th March 2020.The amount to be pai um,find the date of repaymen...
A: In Banker's rule there is consideration that there 360 days in year and calculations are done based ...
Q: evin bought a washer and dryer for $1050 but only had a down payment of $150.00. He financed the res...
A: In add on method we simply add interest for given period and add to that with principal amount.
Q: Use the below information to answer the following question. Sales (1,000 units) $ 200,00...
A: The degree of financial leverage (DFL) is a leverage ratio that determines how sensitive a business'...
Q: On Jan 1, you sold short one round lot (i.e. 100 shares) of ABC stock at $21/ share. On Mar 1, a div...
A: Short sale is the type of transaction in which an investor enters when he believes that the price of...
Q: ABC Bank pays interest at the rate of 2% compounded quarterly. How much will Ken have in the bank at...
A: Note : All the Given Options are incorrect , so we are solving the correct one for you as per the me...
Q: It is November 2019. The following variance -covariance matrix, for the market (S&P 500) and stocks ...
A: Alpha on a stock is the return over an above the minimum expected rate of return. A positive alpha m...
Q: At age 20 when you graduate, you start saving for retirement. If your investment plan pays an APR of...
A: Annuity refers to the payment series of same nominal value which are paid or received at a same inte...
Q: You borrowed $444,000 with a 30-year, fully amortized, adjustable-rate mortgage 1 year ago. The paym...
A: Loan Amount = $444,000 Time Period = 30 Years Original index rate = 4% Margin = 2% Initial rate = 4%...
Q: Mrs. Garcia received two offers on a lot that he wants to sell. Ms. Dela Cerna has offered ₱50,000.0...
A: Data given: Ms. Dela Cerna has offered ₱50,000.00 and ₱1 million lump sum payment 5 years from now. ...
Q: Discuss the role of the financial manager or the Chief Finance Officer (CFO) in making decisions as ...
A: Management means effectively use of given sources to get maximum gain. Financial management means ma...
Q: 23. Graph the PW(i) as a function of i for each cash flow shown. The range of in- terest-rate values...
A: The Internal rate of return is used to measure an investment performance. IRR is the rate at which n...
Q: 5.31 2021 7.80 The current interest rate on new debt is 12%; Foust's marginal tax rate is 25%; and i...
A: Cost of Debt: It represents the cost of raising debt capital from the investors. The company pays co...
Q: True or False A.) An advantage of the discounted cashflow valuation method is that it is less expos...
A: Note : As per the guidelines, only first three parts will be solved kindly post the remaining parts ...
Q: Fashion Trends PH is seeking to borrow money to finance the development of its online retailing busi...
A: Present value of future value of money should be equal value of money today or more than that than o...
Q: How does compound interest affect the loans you undertake? For example, how would this affect stude...
A: Interest is an additional value which is charged on borrowed or deposited amount. Interest can be an...
Q: Sensitivity analysis is the analysis of the effect of parameter changes on the optimal solution. Cit...
A: Sensitivity analysis is done to understand changes in a target variable when changes are made in ano...
Q: (b) Derive the risk neutral expectation formula for the price of a derivative in the three-step bino...
A: Three Step bi-nominal Model: It was created in 1979, the binomial option pricing model, which is a w...
Q: You want to establish your own business and are thinking about releasing a new Customers will pay P1...
A: Selling price (S) = P 150 Fixed cost (F) = P 400000 + P 500000 = P 900000 Variable cost (V) = P 20 +...
Q: Solve for the unknown number of years in each of the following (Do not round Intermediate calculatio...
A: Discounting and compounding are two methods for calculating the temporal worth of money (TVM). Disco...
Q: Describe the differences between a person with a low personal discount rate and a person with a high...
A: The discount rate is the interest rate charged by the Federal Reserve Bank on short-term loans to co...
Q: Stacy's Dress Shop received a $1,130 invoice dated July 16 with 2/10, 1/15, n/60 terms. On July 30, ...
A: As stated, the payment term is 2/10,1/15,n/60. It means if the customer will make payment within 10 ...
Q: You must choose between the two projects below. What is the EMV for each? Looking at your own person...
A: EMV of project is expected value of the project considering the probability situation of each projec...
Q: Suria hopes to deposit RM3,500 annually in an account that earns 10 percent compounded semiannually ...
A: Future Value The future value is the amount that will be received at the end of a certain period. Th...
Q: Suppose a stock had an initial price of $86 per share, paid a dividend of $1.70 per share during the...
A: Total return on stock is the sum of dividend paid and capital gain from stock. Total return can be c...
Q: A government-funded wind-based electric power generation company in the southern part of the country...
A: Conventional B/C ratio is the overall value generated by an asset. It is calculated as present value...
Q: Briefly tell us how you approach problems from a quantitative and qualitative perspective. ( Financi...
A: As a financial management intern I have to look into aspects of budgeting (making different types of...
Q: a manufacturer makes two products, windows and doors. Each must be processed through two work areas....
A: The question is based on the concept of finding the optimal profit with given production constraints...
Q: ABC Corporation paid $5 dividends per share last year. Dividends will grow by 10% and then 8% in the...
A: D0 = $5 D1 = $5(1.1) = $5.5 D2 = $5.5(1.08) = $5.94 Growth rate after this (g) = 5% r = 15%
Q: 3 Outsourcing IT services has grown in popularity due to a variety of factors, according to you. Th...
A: Banking and financial sectors provide financial assistance to the companies or borrowers. It plays a...
Q: Reddick Enterprises' stock currently sells for $24.50 per share. The dividend is projected to increa...
A: The stock price in future can be calculated as stock price today compounded by the growth rate of di...
Q: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have b...
A: The payback period is the time required to recover the initial investment. The discounted payback pe...
Q: A borrower received a 30-year ARM mortgage loan for $200,000. Rate caps are 3/2/6. The start rate is...
A: A variable-rate mortgage (ARM) is a type of house loan with a variable interest rate. The initial in...
Q: 6. An engine is offered for installment basis which can be purchased by paying P 2,400 each month fo...
A: Note: As per the rules of Bartleby,in case of multiple unspecified questions only the first question...
Q: f you put up $41,000 today in exchange for a 5.1 percent, 15-year annuity, what will the annual cash...
A: Present value (PV) = $41000 Interest rate (r) = 5.1% Number of annual payments (n) = 15
Q: The Cost of Capital: Weighted Average Cost of Capital Question 13 of1 Check My Work The firm's targe...
A:
Q: After seeing its neighboring village obtain a new water tower, the city board of East Dubuque begins...
A: Time Period = 20 Years Interest rate = 9% compounded daily Future Value = $1,750,000
Q: For each of the following, compute the future value (Do not round intermediate calculations and roun...
A: Future Value(FV) refers to the accumulated or compounded value of a sum at future date which is dete...
Q: $27,831.47 $29,851.84 E S29,083.89 $30,729.84
A: The present value of money is the money without including interest that is the discounted value of m...
Q: Plz solve it within 30-40 mins I'll give you multiple upvote
A: Note : All the Options mentioned along with the question are incorrect,so we are solving the correct...
Q: Which investments can provide the best protection of capital and offers low risks. * a. savings depo...
A: An investment is an asset that is brought with the intention of earning a return or profit from it.
Q: Equal – quarterly deposits of P 2,000 for 2 years which starts immediately is made at a savings acco...
A:
Q: ! Show Full Solution ! *using ANNUITY formulas only *use data given below Your lover has promi...
A: The amount of P 6000 is an annuity and here we have to determine the present value of this annuity.
Q: Maintenance of a small building amount to P 100,000 every year for the next 5 years and will increas...
A: Annual maintenance = P 100000 for 5 years and P 150000 afterwards forever Interest rate = 6%
Q: The cost of a fence that can detect poacher intrusion into a National Wildlife Preserve is $2.4 mill...
A: The annual worth method is a method of finding the profitability of a project by assigning the reven...
Q: Infosys technologies inc. An Indian technology company, reported income of $419 million this year. A...
A:
Q: . A manufacturing company purchased electrical services for the next 5 years to be paid for with $70...
A: The present value of a future sum of money or stream of cash flows with a fixed rate of return is it...
Q: In deciding the appropriate level of current assets for the firm, management is confronted with A...
A: Current Assets: They are the assets that can be converted into cash easily and short term in nature....
A firm has daily cash receipts of P100,000. A bank has offered to reduce the collection time on the firm’s deposits by three days for a monthly fee of P500. If
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- The Raattama Corporation had sales of $3.5 million last year, and it earned a 5% return (after taxes) on sales. Recently, the company has fallen behind in its accounts payable. Although its terms of purchase are net 30 days, its accounts payable represents 60 days’ purchases. The company’s treasurer is seeking to increase bank borrowing in order to become current in meeting its trade obligations (that is, to have 30 days’ payables outstanding). The company’s balance sheet is as follows (in thousands of dollars): How much bank financing is needed to eliminate the past-due accounts payable? Assume that the bank will lend the firm the amount calculated in part a. The terms of the loan offered are 8%, simple interest, and the bank uses a 360-day year for the interest calculation. What is the interest charge for 1 month? (Assume there are 30 days in a month.) Now ignore part b and assume that the bank will lend the firm the amount calculated in part a. The terms of the loan are 7.5%, add-on interest, to be repaid in 12 monthly installments. What is the total loan amount? What are the monthly installments? What is the APR of the loan? What is the effective rate of the loan? Would you, as a bank loan officer, make this loan? Why or why not?Now assume that it is several years later. The brothers are concerned about the firm’s current credit terms of net 30, which means that contractors buying building products from the firm are not offered a discount and are supposed to pay the full amount in 30 days. Gross sales are now running $1,000,000 a year, and 80% (by dollar volume) of the firm’s paying customers generally pay the full amount on Day 30; the other 20% pay, on average, on Day 40. Of the firm’s gross sales, 2% ends up as bad-debt losses. The brothers are now considering a change in the firm’s credit policy. The change would entail: (1) changing the credit terms to 2/10, net 20, (2) employing stricter credit standards before granting credit, and (3) enforcing collections with greater vigor than in the past. Thus, cash customers and those paying within 10 days would receive a 2% discount, but all others would have to pay the full amount after only 20 days. The brothers believe the discount would both attract additional customers and encourage some existing customers to purchase more from the firm—after all, the discount amounts to a price reduction. Of course, these customers would take the discount and hence would pay in only 10 days. The net expected result is for sales to increase to $1,100,000; for 60% of the paying customers to take the discount and pay on the 10th day; for 30% to pay the full amount on Day 20; for 10% to pay late on Day 30; and for bad-debt losses to fall from 2% to 1% of gross sales. The firm’s operating cost ratio will remain unchanged at 75%, and its cost of carrying receivables will remain unchanged at 12%. To begin the analysis, describe the four variables that make up a firm’s credit policy and explain how each of them affects sales and collections.Lowe and Price Co has annual credit sales of $12,000,000, and three months are allowed for payment. The company decides to offer a 2% discount for payments made within ten days of the invoice being sent, and to reduce the maximum time allowed for payment to two months. It is estimated that 50% of customers will take the discount. The company requires a 20% return on investments. Assume that the volume of sales will be unaffected by the discount. What is the reduction in accounts receivable? What is the opportunity income from the reduction in accounts receivable? What is the discount allowed each year? What is the net benefit of new discount policy each year?
- Dome Metals has credit sales of $162,000 yearly with credit terms of net 30 days, which is also the average collection period. a. Assume the firm offers a 2 percent discount for payment in 15 days and every customer takes advantage of the discount. Also assume the firm uses the cash generated from its reduced receivables to reduce its bank loans which cost 8 percent. What will the net gain or loss be to the firm if this discount is offered? (Use a 360-day year.) Loss of: $_________A business plans to use £20,000 of cash during the forthcoming year. It holds most of its cash in a deposit account from which it costs £30 to make each withdrawal and which pays interest at 10 per cent p.a. What is the optimal size for each withdrawal?A firm has daily cash receipts through checks. On average 150 checks are received per day while each check has an averagevalue of P2,500. It takes an average of 3 days for the bank to clear the checks. A bank has offered to decrease the clearingperiod to one day for a monthly fee of P500. The bank gives an interest rate of 3% per year. 1. How much is the decrease of the clearing float in days? 2. How much is the annual cost of the service? 3. What is the annual net benefit or (loss) from having this service?
- Halliday Inc. receives a $2 million payment once a year. Of this amount, $700,000 is needed for cash payments made during the next year. Each time Halliday deposits money in its account, a charge of $2.00 is assessed to cover clerical costs. If Halliday can hold marketable securities that yield 5 percent, and then convert these securities to cash at a cost of only the $2 deposit charge, what is the total cost for one year of holding the minimum cost cash balance according to the Baumol model?Taylor Glass has annual sales of $1,790,000. Although it extends credit for 30 days (n30), the receivables are 20 days overdue. What is the average accounts receivable outstanding, and how much could the company save in interest expense if customers paid on time and if it costs Taylor Glass 9 percent to carry its receivables? Assume 360 days in a year. Round your answers to the nearest cent. Accounts receivable: $ Interest saved: $