BrightLine Medical Products delivers medical supplies to small offices across the metro area. The typical BrightLine customer orders $1,200 worth of supplies in the average month. BrightLine believes that the average customer stays with BrightLine for 2.4 years. What is BrightLine's MONTHLY CHURN RATE for these small office customers? (Report your answer as a percent. Report 25.5%, for example, as "25.5". Rounding: tenth of a percent.) ANSWER IS: (3.5), but HOW is that the answer? P
Q: 6 points Save 0 million and A's present value of net cash flows after tax is $245 million, Project B…
A: Projects Initial outlay (Million $) PV of net cash flows after tax (Million $) Net Present Value…
Q: Do-Well bonds have a face value of $1,000 and are currently quoted at 895. The bonds have an 8…
A: Formula Current yield = Annual coupon payment/Bond price Where Annual coupon payment = Face…
Q: ROBLEM N0.3 r. Bolen needed P27,000 as a down ayment on a new lesla car. He borrowe
A: The loans are taken to purchase the car but these are to be paid by the periodic payments that carry…
Q: Net present value Using a cost of capital of 16%, calculate the net present value for the project…
A: Cost of Capital is 16% To Find:- NPV
Q: Should market or book value be used for debt and equity?
A: Book value for debt and equity represents the recorded value of the debt and equity in the company's…
Q: The Davis Corporation (DC) owns a building covered by the ISO Earthquake and Volcanic Eruption…
A: Insurance compensation: When covered damages occur, the amount paid by an insurance company to the…
Q: explain further the principle of self-liquidating debt and how can it be used to manage a firm's…
A: Debt is referred as an obligation, which requires one party that is debtor for making the payment or…
Q: Which of the following is NOT relevant to the evaluation of a proposed project? Incremental cash…
A: While eveluating a project all the initial cash flows and subsequent cash flows are considered. All…
Q: Over the period of 1926-2017, which one of the following had the highest volatility of returns? U.S.…
A: Of all the investmenst, i,e long and short bonds, shares, small company stock are more volatile as…
Q: A gold-mining firm is concerned about short-term volatility in its revenues. Gold currently sells…
A: Data given: Current selling price of Gold per ounce= $2100 Company will bring 1400 ounces of Gold to…
Q: The answer is somewhat close. The right answer is 1.5337 Please clarify
A: Stock price is $50 Strike price is $52 Risk free rate is 1% Time period is 3 months To Find: Value…
Q: Explain why NPV is the best criterion and how it overcomes problems inherent in the other methods.
A: The net present value (NPV) or net present worth (NPW)[1] is applied to a series of cash flows that…
Q: TAMES provson of the Aror
A: Taxes provision of the ACA include Workers earning more than 200000 pay high medicare tax and 3.8%…
Q: Chrisine Looks for a Way to Invest Her Newfound Wealth Christine Norton-Hines is a young Hollywood…
A: Concept. 1.Net profit % =( net profit ÷ sales) × 100 2. PE ratio is price earnings ratio . PE ratio…
Q: How much do you have to deposit today so that beginning 11 years from now you can withdraw $12,000…
A: Given, Amount that can be withdrawn from years 11 to 16 is $12000 Additional amount at end of 16 th…
Q: What would be BAT's current before-tax component cost of debt? a. What would be BAT's current…
A: Cost of Debt: It is the cost of raising debt capital for the company and the such cost of debt is…
Q: A risky security has less risk than the overall market. What must the beta of this security be? O 0…
A: The beta of the overall market is 1.00. Since the security has lesser risk than the overall market,…
Q: Tesla, Inc. common stock has a beta of 2.08. If the expected risk-free return is 1.5% and the…
A: Stock beta (b) = 2.08 Risk free rate (Rf) = 0.015 Market return (Rm) = 0.14 Expected return = ?
Q: How long does it take for an investment to double in value if it is invested at 5% compounded…
A: Assuming Investment = 100 Future Value = Double of investment = 200 Interest Rate = 5% with…
Q: Calculate the amount of money that will be in each of the following accounts at the end of the given…
A: Future Value: It represents the future worth of the current sum of the amount and is computed by…
Q: Does a firm's social presence need to be considered before an individual decides to invest? Why, or…
A: Investment means engaging your funds to generate income for the future. Before investing, various…
Q: Maturity Value (F) Principal (P) Rate (r) Time (t) Interest (I,) P 60,000.00 4% 15 (1) (2) (3) 12% P…
A: Interest = Principal x Rate x Time 1) Interest = 60,000 x 4% x 15 =36,000 2) Maturity Value =…
Q: Maricopa Success invested $ in stocks. Maricopa Success invested $ in bonds. Maricopa Success…
A: Investment refers to those mechanism which is used by the company for the purpose of generating…
Q: A newly established company is considering purchasing a lot in the province. The company needs 10M…
A: The concept of the time value of money states that the same amount of money is worth more today than…
Q: A firm has a cost of debt of 7 percent and a cost of equity of 15 percent. The debt-asset ratio is…
A: Cost of debt = 7% Cost of equity = 15% Debt-asset ratio = 0.40 Equity-asset ratio = 1-0.40 = 0.60
Q: What is the uniform annual payment for 12 years is equivalent to the above payment if the interest…
A: Time value of money (TVM) refers to the method used to measure the amount of money at different…
Q: 5.00. How much was loaned at each rate?
A: Loan: It is the sum of the amount borrowed by the borrower from the lender. The borrower pays…
Q: U TIc plans LU Imvest $2,500 in stock X, $2.0C E. What return should Chan expect to earn from this
A: Portfolio Expected Return: It is estimated by the sum of individual returns of the security in the…
Q: A trust fund amounting to ₱6700000 earns 7.4% annual interest. If ₱150,000 is to be withdrawn at the…
A: Amount of trust fund is P6,700,000 Interest rate is 7.4% Time period is 5 years Amount of withdrawl…
Q: You deposit $300 each month into an account earning 8% interest compounded monthly. a) How much will…
A: a) Money in account in 30 years: Solved using Financial Calculator PMT = -300 N = 12 * 30 = 360 I/Y…
Q: 9. A company that sells high-purity laboratory chemicals is considering investing in new equipment…
A: An annuity refers to regular cash flows made at equal intervals and of the same amounts. The future…
Q: FINA 340 Long Horizon NPV Problem (terminal value) Beta Compounding Pharmaceuticals is about to…
A: NPV NPV is a capital budgeting tool to decide on whether the capital project should be accepted or…
Q: 1. Only the sole proprietorship and partnership forms of business organization can resort to…
A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: If you were given a chance to invest your money what is your preference Simple or compound interest?…
A: Solution:- In simple interest, the interest is calculated on the principal amount. While on the…
Q: Wildhorse Corp. is considering purchasing one of two new diagnostic machines. Either machine would…
A: The net present value is a method of finding the profitability of a project by adding all discounted…
Q: Banks deal exclusively with documents means that they are not in a position to verify whether the go…
A: Banks often have to verify if the goods supplied are identical or not as per the specifications.…
Q: A father deposited a total amount of P88,500 on two different investments. The first investment…
A: The concept of the time value of money states that due to the ability of invested money to earn…
Q: Use a bankers year: 360 T-bills (Treasury bills) are one of the instruments the U.S. Treasury…
A: Maturity Value is $17,750 Purchase price is $17,564.46 Time to maturity is 200 days Number of days…
Q: TAFKAP Industries has 3 million shares of stock outstanding selling at $17 per share, and an issue…
A: No of shares 30,00,000.00 Price per share $…
Q: ATIRR. You can buy a building for $1,000 and sell it after 10 years for $1,100. (NOI = 70; Annual…
A: Here, To Find: After-tax rate of return =?
Q: You want to buy a $260,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan…
A: a) Loan Amount = Total price of house - Down payment = 260,000 - (260,000 * 5%) = 260,000 - 13,000…
Q: Tatum can borrow at 6.85 percent. The company currently has no debtand the cost of equity is 11.25…
A: Debt and equity are two main sources of finance through which the company borrows the funds for long…
Q: A machine cost 80,000 and the salvage value after 20 years is 20,000. Find the equivalent annual…
A: Concept. Equivalent annual worth cost is computed when net present value of cashflows are divided…
Q: A borrower takes out a 30-year loan for a house worth $250,000. If the annual interest rate is 6%.…
A: Current value of loan (PV) = $250,000 Interest rate (r) = 6% Period for future value (t) = 12 Years…
Q: When estimating the amount and cost of debt, should you aggregate the various line items into larger…
A: The effective interest rate that a corporation pays on its debts, such as bonds and loans, is…
Q: IRR, investment life, and cash inflows Oak Enterprises accepts projects earning more than the firm's…
A: Initial investment is $96,200 Annual cash flow are $15000 Cost of Capital is 13% To Find:- IRR of…
Q: You would like to have $53,000 in 13 years. To accumulate this amount, you plan to deposit an…
A: Amount to accumulate is $53,000 Interest rate is 6% Time period is 13 years To Find:- Annual…
Q: After making the twenty-sixth payment on your car loan, you wanted to find out how much is left of…
A: Loan amount (PV) = $27000 Interest rate = 7.1% Monthly interest rate (r) = 7.1%/12 =…
Q: Investor Dan has $607,000 to invest in bonds. Bond A yields an average of 8.5% and the bond B…
A: Given, In this question, we have to find the amount which is to be invested in A bond.
Q: On the day his grandson was born, a man deposited to a trust company a sufficient amount of money so…
A: Here, Annual payment starting from year 18 = P 10,000 Number of years = 5 years Interest rate =…
BrightLine Medical Products delivers medical supplies to small offices across the metro area. The typical BrightLine customer orders $1,200 worth of supplies in the average month. BrightLine believes that the average customer stays with BrightLine for 2.4 years. What is BrightLine's MONTHLY CHURN RATE for these small office customers? (Report your answer as a percent. Report 25.5%, for example, as "25.5". Rounding: tenth of a percent.)
ANSWER IS: (3.5), but HOW is that the answer? Please explain.
Step by step
Solved in 2 steps
- Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of 25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is 1,100 per year. In addition to the salaries, Elliott spends 27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. 4. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing costs are relevant? By how much will purchasing costs increase if the order is accepted? (b) Suppose that the special order causes 700 additional purchase orders. How will your answer to (a) change?Halifax Shoes has 30% of its sales in cash and the remainder on credit. Of the credit sales, 65% is collected in the month of sale, 25% is collected the month after the sale, and 5% is collected the second month after the sale. How much cash will be collected in August if sales are estimated as $75,000 in June, $65,000 in July, and $90,000 in August?Alard Manufacturing Company has a billing department staffed by four billing clerks. Each clerk is paid 32,000 per year and is able to process 8,000 bills. Last year, 27,360 bills were processed by the four agents. Calculate the unused capacity in terms of number of bills. a. 27,360 b. 4,640 c. 8,000 d. 32,000
- 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.Porter Insurance Company has three lines of insurance: automobile, property, and life. The life insurance segment has been losing money for the past five quarters, and Leah Harper, Porters controller, has done an analysis of that segment. She has discovered that the commission paid to the agent for the first year the policy is in place is 55 percent of the first-year premium. The second-year commission is 20 percent, and all succeeding years a commission equal to 5 percent of premiums is paid. No salaries are paid to agents; however, Porter does advertise on television and in magazines. Last year, the advertising expense was 500,000. The loss rate (payout on claims) averages 50 percent. Administrative expenses equal 450,000 per year. Revenue last year was 10,000,000 (premiums). The percentage of policies of various lengths is as follows: Experience has shown that if a policy remains in effect for more than two years, it is rarely cancelled. Leah is considering two alternative plans to turn this segment around. Plan 1 requires spending 250,000 on improved customer claim service in hopes that the percentage of policies in effect will take on the following distribution: Total premiums would remain constant at 10,000,000, and there are no other changes in fixed or variable cost behavior. Plan 2 involves dropping the independent agent and commission system and having potential policyholders phone in requests for coverage. Leah estimates that revenue would drop to 7,000,000. Commissions would be zero, but administrative expenses would rise by 1,200,000, and advertising (including direct mail solicitation) would increase by 1,000,000. Required: 1. Prepare a variable-costing income statement for last year for the life insurance segment of Porter Insurance Company. 2. What impact would Plan 1 have on income? 3. What impact would Plan 2 have on income?Porter Insurance Company has three lines of insurance: automobile, property, and life. The life insurance segment has been losing money for the past five quarters, and Leah Harper, Porters controller, has done an analysis of that segment. She has discovered that the commission paid to the agent for the first year the policy is in place is 55 percent of the first-year premium. The second-year commission is 20 percent, and all succeeding years a commission equal to 5 percent of premiums is paid. No salaries are paid to agents; however, Porter does advertise on television and in magazines. Last year, the advertising expense was 500,000. The loss rate (payout on claims) averages 50 percent. Administrative expenses equal 450,000 per year. Revenue last year was 10,000,000 (premiums). The percentage of policies of various lengths is as follows: Experience has shown that if a policy remains in effect for more than two years, it is rarely cancelled. Leah is considering two alternative plans to turn this segment around. Plan 1 requires spending 250,000 on improved customer claim service in hopes that the percentage of policies in effect will take on the following distribution: Total premiums would remain constant at 10,000,000, and there are no other changes in fixed or variable cost behavior. Plan 2 involves dropping the independent agent and commission system and having potential policyholders phone in requests for coverage. Leah estimates that revenue would drop to 7,000,000. Commissions would be zero, but administrative expenses would rise by 1,200,000, and advertising (including direct mail solicitation) would increase by 1,000,000. Required: 1. Assume Fred holds the policy for one year and then drops it. What is his contribution to Porters operating income? 2. Assuming Fred holds the policy for three years, what is his contribution to Porters operating income in the second and third years? Over a three-year period? What implications does this hold for Porters efforts to retain policyholders?
- JW Office Supplies, Inc., is a wholesale distributor of office supplies. It sells pencils and pens, paper goods (including computer paper and forms), staplers, calendars, and other items, excluding furniture and other major items such as copy machines that you would expect to find in an office. Sales have been growing at 5 percent per year during the past several years. Mr. Kay, the president of JW Office Supplies, recently attended a national office supplies convention. In conversations during that convention, he discovered that sales for ABC Office Supplies competitors have been growing at 15 percent per year. Arriving back home, he did a quick investigation and discovered the following: JW Office Supplies customer turnover is significantly higher than the industry average. JW Office Supplies vendor turnover is significantly lower than the industry average. The new market analysis system was supposed to be ready two years ago but has been delayed for more than one year in systems development. A staff position, reporting to the president, for a person to prepare and analyze cash budgets was created two years ago but has never been filled. Mr. Kay has called on you to conduct a systems survey of this situation. You are to assume that a request for systems development has been prepared and approved. The information system at JW Office Supplies is much like that depicted in Chapters 10 through 16. Make and describe all assumptions that you believe are necessary to solve any of the following: a. What are the specific tasks of this systems survey? b. Indicate specific quantifiable benefits and costs that should be examined in assessing the economic feasibility of any solutions that might be proposed. Explain how you would go about quantifying each benefit or cost. c. Propose and explain three different scopes for the systems analysis. Use a context diagram to describe each scope alternative. Hint: What subsystems might be involved in an analysis?Olympus, Inc., manufactures three models of mattresses: the Sleepeze, the Plushette, and the Ultima. Forecast sales for next year are 15,000 for the Sleepeze, 12,000 for the Plushette, and 5,000 for the Ultima. Gene Dixon, vice president of sales, has provided the following information: a. Salaries for his office (including himself at 65,000, a marketing research assistant at 40,000, and an administrative assistant at 25,000) are budgeted for 130,000 next year. b. Depreciation on the offices and equipment is 20,000 per year. c. Office supplies and other expenses total 21,000 per year. d. Advertising has been steady at 20,000 per year. However, the Ultima is a new product and will require extensive advertising to educate consumers on the unique features of this high-end mattress. Gene believes the company should spend 15 percent of first-year Ultima sales for a print and television campaign. e. Commissions on the Sleepeze and Plushette lines are 5 percent of sales. These commissions are paid to independent jobbers who sell the mattresses to retail stores. f. Last year, shipping for the Sleepeze and Plushette lines averaged 50 per unit sold. Gene expects the Ultima line to ship for 75 per unit sold since this model features a larger mattress. Required: 1. Suppose that Gene is considering three sales scenarios as follows: Prepare a revenue budget for the Sales Division for the coming year for each scenario. 2. Prepare a flexible expense budget for the Sales Division for the three scenarios above.Cash & Credit Supermarket Inc. currently asks its credit customers to pay by the end of the month after the month of delivery. In practice, customers take rather longer to pay – on average 70 days. Sales revenue amounts to ₱ 8 million a year and bad debts to ₱ 20,000 a year. The company planned to offer customers a cash discount of 2% for payment within 30 days. Cash & Credit Supermarket estimates that 50% of customers will accept this facility but that the remaining customers, who tend to be slow payers, will not pay until 80 days after the sale. At present the business has an overdraft facility at an interest rate of 12% a year. If the plan goes ahead, bad debts will be reduced to ₱ 10,000 a year and there will be savings in credit administration expenses of ₱ 6,000 a year. (Use 360 days) How much is the net cost/benefit of the proposed policy?Required to answer. Single choice. (Ignore income taxes in this problem.) The Jason Company is considering the purchase of a machine…
- The campus store at a large Midwestern university sells writing tablets to students, faculty, and staff. They sell more tablets near exam time. During a typical 10-week quarter, the pattern of sales is 2,280, 1,120, 360, 3,340, 1,230, 860, 675, 1,350, 4,600, 1,210.The pads cost the store $1.20 each, and holding costs are based on a 30 percent annual interest rate. The cost of employee time, paperwork, and handling amounts to $30 per order.Assume 50 weeks per year.a. What is the optimal order policy during the 10-week quarter based on the Silver–Meal heuristic? Using this policy, what are the total holding and ordering costs incurred over the 10-week period?b. The bookstore manager has decided that it would be more economical if the demand were the same each week. In order to even out the demand he limits weekly sales (to the annoyance of his clientele). Hence, assume that the total demand for the 10-week quarter is still the same, but the sales are constant from week to week. Determine…Del Spencer is the owner and founder of Del Spencer's Men's Clothing Store. Del Spencer's has its own house charge accounts and has found from past experience that 10 percent of its sales are for cash. The remaining 90 percent are on credit. An aging schedule for accounts receivable reveals the following pattern: 15 percent of credit sales are paid in the month of sale.65 percent of credit sales are paid in the first month following the sale.14 percent of credit sales are paid in the second month following the sale.6 percent of credit sales are never collected. Credit sales that have not been paid until the second month following the sale are considered overdue and are subject to a 3 percent late charge. Del Spencer's has developed the following sales forecast: May $60,000 June 55,000 July 45,000 August 58,000 September 84,000 Required: Prepare a schedule of cash receipts for August and September. Round all amounts to the nearest dollar. Del Spencer's Men's Clothing…PepsiCo sells its soft drinks in approximately 400,000 retail establishments, such as supermarkets, discount stores, and convenience stores. Sales representatives call on each retail account weekly, which means each account is called on by a sales rep 52 times per year. The average length of a sales call is 75 minutes (or 1.25 hours). An average salesperson works 2,000 hours per year (50 weeks per year * 40 hours per week), but each spends 10 hours a week on non-selling activities, such as administrative tasks and travel. How many salespeople does PepsiCo need?