Answered: A manufacturing company invests at a 3%…

A manufacturing company invests at a 3% interest rate in a 100-day treasury bill with a face value of 2M. The service charge costs 1,500. Compute for the cost of the treasury bill.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

See similar textbooks

Related questions

Q: Fruit Packers uses packing machines to prepare its products for shipping. Each machine costs…

A: Equivalent annual cost (EAC) Equivalent annual cost (EAC) is an annual cost to own, maintain and…

Q: An engineer invest 3 million in concrete making. In return, ge receives ₱235,000.00 per year for 5…

A: We need to use excel IRR function to calculate rate of return on investment. Formula is…

Q: Levi Strauss has some of its jeans stone-washed under a contract with independent U.S. Garment Corp.…

A: Equivalent-Uniform-Annual Cost(EUAC) is the cost of operating a machine in current dollars…

Q: Rubbermaid Plastic Corp. invested ₱10,000,000 in manufacturing equipment for producing small…

A: Invested money is ₱10,000,000. Annual interest rate is 5%. Maturity is 7 years. Compounding…

Q: Lamar Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 60; and it…

A: Additional credit can be calculated by using this equation Additional credit =Cost of…

Q: An company uses a technology which it purchased for $15 million. Operating costs are $2 million per…

A: IRR stands for internal rate of return and refers to a method that is used for analyzing the…

Q: Wrangler Western has some of its jeans stone-washed under a contract with an independent contractor,…

A: Present Value of annuity = Annuity1+interest raten Present worth in Year 0 = Sum of present…

Q: DDR Corporation has a 12 percent opportunity cost of funds and currently sells on terms of net/10,…

A: Total amount to be received from the customer after 60 days on term net/10 is as follows: Resultant…

Q: A CARDBOARD BOX FACTORY pays its suppliers 40 days after making the purchase and receiving the…

A: The question is related to Operating cycle in Working Capital Management. Since you have posted a…

Q: A firm has $26000 in an account in order to finance a $32000 expenditure in 2 years. What minimum…

A: Current Value is $26000 Future Value of expenditure is $32000 Time period is 2 years To Find: APR,…

Q: to the original data. If the store manager were paid $5.30 per unit sold in addition to her current…

A: The details of fixed and variable cost for Aviator Station Inc. is given in the question. Firstly…

Q: The following information relates to a company selling 25000 pairs of shoes for a year; selling…

A: "Since you have asked multiple questions, we will solve the first question for you". If you want any…

Q: In order to finance a new project, a company borrowed $4,000,000 at 8% per year with the stipulation…

A: a) Calculation of cost of debt before taxes

Q: Suppose that there is a customer expected to annually generate $1,500 of gross contribution. With…

A: The present value is the value of the sum received at time 0. It is the current value of the sum…

Q: Capital Computer Corporation takes out a $10,000 loan to finance the purchase of new physical…

A: In annuity contracts, the words present value and future value are frequently employed. The amount…

Q: RODEO, Inc., is purchasing machinery at a cost of $2,957,720. The company’s management expects the…

Q: A firm generates $200 and $300 of profits first and second years, respectively. It is so for $1000…

A: We have to find out present value of all than find out sum of all that will be today value of firm.

Q: Calculate the accounting and economic profit of this firm:

A: The revenue and cost details of company has been given below:- Revenue is 100 000 rubles Raw…

Q: The Company has debtors of Rs. 6,00,000, Credit period is 2 months. PV ratio is 80%. Rate of return…

A: PV ratio = 80% Variable cost ratio = 100 - PV ratio = 100 - 80 = 20%

Q: ment of $3M can be made in a business that will produce uniform annual revenue of $1.2M for five…

A: The minimal rate of return that an investor believes should receive in exchange for taking on a…

Q: Lancaster Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 55, and it…

A: Computation of effective cost of bank loan is as follows:Additional credit=8000000365×50…

Q: At an interest rate of 0.06 per year, the present worth of the maintenance cost is nearest to

A: Given PV=5000 Increasing =500 n=15 r=0.06 or 6%

Q: A factory costs $330,000. You forecast that it will produce cash inflows of $105,000 in year 1,…

A: The present value function uses a discount factor for converting a series of future cash flows to…

Q: The TopCar Industries manufactures and sells car components. The current annual sales volume is…

A: Sales volume = 500000 units Selling price per unit = P 0.50 Annual expenses = P 80000

Q: Dinshaw Company is considering the purchase of a new machine. The invoice price of the machine is…

A: GIVEN Dinshaw Company is considering the purchase of a new machine. The invoice price of the…

Q: Assume that RR purchases $200,000 (net of discounts) of materials on terms of 1/10, net 30, butthat…

A: Formula to compute gross purchase as follows:

Q: A corporation makes an investment of $20,000 that will provide the following cash flows after the…

A: Net present value is a modern method of evaluating investment projects which takes into…

Q: Camber Corporation has to decide if they can finance purchasing 10 new machines for all their…

A: b)The positive effects of corporations increasing the amount paid upfront for the capital purchases…

Q: A company has just purchased a machine with a cost of $79,994, and signed a note to pay the…

A: Present value: This is the amount of future value reduced or discounted at a rate of interest till…

Q: Tong Foong Co. Ltd. has decided that its capital budget during the coming year will be $20 million.…

A: Given, Equity % = 60 Debt % = 40 EBIT = $34.667 million Assets = $200 million Average interest rate…

Q: One of the advantages of borrowing is that interest is deductible for income tax purposes.a. If a…

A: Interest expense: It can be defined as the cost of borrowing or cost incurred on a loan taken by a…

Q: us Communication Ltd has the option of issuing commercial papers with a denomination of $20,000 per…

A: Commercial papers are short term money market instruments that are issued to raise the money in the…

Q: The management of XYZ Co has annual credit sales of $20 million and accounts receivable of $4…

A: Answer: Collection Period = Accounts Receivable/Credit Sales × 365 days Put the values in the…

Q: The initial purchase price of a new stamp press is $6,000. The firm will spend $5,000 on shipping…

A: Initial purchase price of a new stamp is $6,000 Shipping and installation cost us $5,000 Training…

Q: By the end of this year, the total payroll expenditure of a small engineering consulting firm is…

A: Salary will be increased by 6 % p.a. Future worth will be calculated by discounting the value of…

Q: National Co. has the opportunity to increase its annual sales by P125,000 by selling to a new,…

A: Manufacturing and selling expense = 125,000 x 70% = 87,500 Uncollectible expense = 125,000 x 10% =…

Q: A corporation makes an investment of $20,000 that will provide the following cash flows after the…

A: Net present value is the difference between the present value of cash inflows and present value of…

Q: The average profit after tax for ABC company is 120,000$; it has initiated an investment of…

A: Average Rate Return(ARR) shows average profit earned on investment on annual basis. ARR is expressed…

Q: A firm sells 500,000 widgets at $40 each, the cost of the widgets is $25 each, expected general and…

A: An income statement is a financial report that indicates the revenue and expenses of a business. It…

Q: For the end of this year, yearly labor cost of a company is estimated as $35000 and it will increase…

A: The given problem can be solved using NPV function in excel.

Q: Pasti Berhad values, advertises and sells residential property on behalf of its customers. The…

A: Cash budget refers to an estimation of cash inflows and outflows in a business over a specified…

Q: Sons Company Ltd estimated cash payments of Rs 60 Lakhs for a one-month period. The average fixed…

A: Cash flow planning is also aided by EOQ. Many small firms make the mistake of tying up too much…

Q: A firm collects $60 million at an annual rate (252 days) which is expected to remain at that same…

A: Cost-benefit analysis means analysing the cost and benefit of the proposed alternative. If the…

Q: ny expects the cost of equipment maintenance to be $5,000 in year one, $5,500 in year two, and…

A: The given problem can be solved using NPV function in excel.

Q: chine could be purchased for £800,000; it would be used for 3 years and then sold for £580,000. It…

A: The depreciation of machine have tax advantages and tax on the depreciation reduces the impact of…

Q: A machine costs £16,000 and has a 5-year life. The required rate of return is 10%. By how much can…

A: Depreciation= 30%* Opening value

Question

A manufacturing company invests at a 3% interest rate in a 100-day treasury bill with a face value of 2M. The service charge costs 1,500. Compute for the cost of the treasury bill.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Gear Up Co. pays 65% of its purchases in the month of purchase, 30% in the month after the purchase, and 5% in the second month following the purchase. What are the cash payments if it made the following purchases in 2018?
Every 15 days a company receives P10,000 worth of raw materials from its suppliers. The credit terms for these purchases are 2/15, net 30, and payment is made on the 30th day after each delivery. Thus, the company is considering a 1-year bank loan for P9,800 (98% of the invoice amount). If the effective annual interest rate on this loan is 12%, what will be the net peso savings over the year by borrowing and then taking the discount on the materials?
Suppose a company invests in a $50,000 United States Treasury bill at 3.35% interest for 28 days. The bank through which the bill is purchased charges a service fee of $15. What is the cost of the Treasury bill? (whole number)
angel co. has P500,000 in receivable that carries a 30-day credit term, 2% factor’s fee, 5% holdback reserve, and an interest of 12% per annum on advances. Use 360 days. What is the effective annual financing cost of factoring?
Honesty Company is investing in 182-day treasury bills with a total fair market value of P2,500,000 for a purchase price of P2,475,000.What is the annualized investment rate (round off your answer to two decimal places)
The Karson transport company currently has net operating income of $495,000 and pays interest expenses of $198,000. The company plans to borrow $1.02 million on which the firm will pay 12 percent interest. The borrowed money will be used to finance an investment that is expected to increase the firm’s net operating income by $397,000 a year. A. What is Karson’s time interest earned ratio before the loan is taken out and the investment is made ? The times interest ratio is Round to two decimal places.
ABC Co has sales of $76m for the previous year. Receivables daysare 58 and receivables are financed using an overdraft costing 13%per annum.Required:-Calculate the receivables balance and the annual financing cost forreceivables?
NewBank decides to invest $45 million in 30-day T-bills. The T-bills are currently trading at $4,986.70 (including commissions) for a $5,000 face value instrument. What does the balance sheet look like?
Uptown Bank has granted a line of credit of $80,000 with an interest rate of 7.5 percent and a compensating balance requirement of 2.5 percent to Jones Hardware. The compensating balance requirement is based on the total amount borrowed. What is the effective annual interest rate if the firm needs $55,000 for one year to finance its inventory? Group of answer choices
An engineering firm can pay for its liability insurance on an annual or monthly basis. If paid monthly, the insurance costs $4500. If paid annually, the insurance costs $50,000. What are the monthly rate of return and the nominal and effective interest rates for paying on an annual basis?
An executive invests $22,000, some at 7% and some at 6% annual interest. If he receives an annual return of $1,420, how much is invested at each rate? Pls thanks
Cowboy Construction buys materials on account from Highes. Highes offers a 2 percent discount for invoices paid within 10 days. Full payment is due within 90 days. But Cowboy Construction routinely pays its invoices on the ninetieth day. If Cowboy’s effective tax rate is 42 percent, what is the cost of capital for accounts payable in percentage? Excel calculation