Ways to reduce the cash conversion cycle include: All of the above B: Lengthen the Payables Period A: Reduce the operating cycle C; Decrease the collection period D: Pay payroll monthly versus weekly
Q: Nikita Enterprises has bonds on the market making annual payments, with ten years to maturity, a par…
A: The coupon rate is the rate at which the interest is paid to the bondholders based on the face value…
Q: Rare Agri-Products Ltd. is considering a new project with a projected life of seven (7) years. The…
A: FCF are the free cash flows that can be realized from investments. The depreciation amount is not…
Q: Beginning three months from now, you want to be able to withdraw $3,000 each quarter from your bank…
A: Present Value of Ordinary Annuity, the concept which dictates the present value of a sum of all cash…
Q: Month evious Month's Balance Finance Charge (in 5) (in 5) Purchases and Cash Advances Payments and…
A: Credit card are now popular now days and provide short term money to buy anything without paying…
Q: You estimate that your sheep farm will generate 1.5 million of profits on sales of 4.4 million under…
A: The degree of operating leverage is an important financial metric or ratio. This metric or ratio is…
Q: On a 15-year, $200K mortgage at 4% APR, how much interest will you pay in ONLY the second year if…
A:
Q: Phoebe realizes that she has charged too much on her credit card and has racked up $5,100 in debt.…
A: The present value monthly payments will be equal to the value of debt. We can use NPER function in…
Q: What is the future value of $4,000 deposited for four years earning 8% interest rate…
A: Principal value(P) = 4000$Rate of interest(R) = 8%Number of period(n) = 4 years
Q: a. If there is a 10 percent gain in the value of the dollar versus the euro, what will be the total…
A: The percenatge return is the amount of profit earned over the period on the initial investment done.
Q: An investment will pay $16,400 at the end of each year for eight years and a one-time payment of…
A: The current value of an investment is determined by considering the future cash flows, discounted to…
Q: A stock has had returns of 10 percent, 17 percent, 26 percent, −14 percent, 24 percent, and −9…
A: Arithmetic average return is the simple average return and geometric average return is the annual…
Q: Use the term structure of riskfree interest rates below (continuous compounding) Year Rate Year Rate…
A: Forward rate is commonly used to hedge against fluctuations in interest rates or to speculate on…
Q: Tecumseh Inc. is analyzing the possible merger with Devonshire Inc. Savings from the merger are…
A: The maximum cash price per share refers to the highest amount of cash that a company is willing to…
Q: The president of Hill Enterprises, Terri Hill, projects the firm's aggregate demand requirements…
A: The average monthly demand requirementThe average monthly demand requirement refers to the average…
Q: A stock just paid a $7.93 dividend. The required return on the stock is 17.0% and dividends are…
A: The objective of this question is to calculate the current price of a stock using the Gordon Growth…
Q: Solve for the stock price, P0, using the following information: D1: $3.31 D2: $3.94 D3: $4.76 D4:…
A: The objective of the question is to calculate the current stock price (P0) using the given dividends…
Q: Assume that investing $500 in a fund today will give you a return of $530 a year later. On the other…
A: See the explanation belowExplanation:No, based on the information provided, choosing the bank's…
Q: You are eligible for a 30-year fixed-rate home mortgage with an interest rate of 3.6% per year. If…
A: Given:Annual interest rate = 3.6% = 0.036 (in decimal),Monthly payment (P) = $3,183,Loan term = 30…
Q: A Company is considering a proposal of installing a drying equipment. The equipment would involve a…
A: The Payback Period tracks the duration for an investment to recover its initial cost, while the…
Q: You want to buy a car, and a local bank will lend you $40,000. The loan will be fully amortized over…
A: The monthly loan payment can be calculated by using the excel formula ''=PMT''Effective Annual Rate…
Q: You are considering the purchase of a property today for $300,000. You plan to finance it with an 80…
A: Real estate investment involves the purchase, ownership, management, rental, or sale of real estate…
Q: Your eccentric Aunt Claudia has left you $50,000 in BP shares plus $50,000 cash. Unfortunately, her…
A: Portfolio variance refers to the method of measuring the risk associated with the securities in…
Q: Carnes Cosmetics Co.'s stock price is $45, and it recently paid a $2.00 dividend. This dividend is…
A: The objective of the question is to find the constant growth rate of the stock after Year 3. This…
Q: Give the exaplanation of formula and concept.do not provide plagarised content otherwise i dislike…
A: A bond is a fixed-income security that provides the bondholder a defined periodic coupon payments…
Q: Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral…
A: Net present value refers to the capital budgeting techniques used to evaluate the profitability and…
Q: Ch2-Q20. Accounting Values versus Cash Flows. In Problem 19, suppose Belyk Paving Co. paid out…
A: Since the FCF is 600, 000 and BelykPavingCo. paidout 420,000 in cash dividends, this leaves (600,000…
Q: Royal Aviation Corporation is considering purchasing a piece of equipm wing fixtures for an…
A: Annual worth analysis is a financial evaluation method used to compare investment alternatives with…
Q: Use the following to solve questions a. and b. and please buid an excel spreadsheet and please show…
A: Both choices result in the same monthly payment.The total cost over 5 years would be the same, as…
Q: Dynamic is considering investing in a rooftop solar network to generate its own power. Any unused…
A: IRR is the break even rate of return at which present value of cash flow is equal to initial…
Q: A health insurance policy pays 75 percent of physical therapy costs after a deductible of $240. In…
A: The health insurance policy will pay 75% of the cost after a deductible of $240.It means out of…
Q: (please correct and incorrect option explain and correct answer) Which of the following statements…
A: A common stock is a capital market security that gives the investor an ownership interest in the…
Q: Suzan just finished a new movie script. Paramount offers to buy the script for (a) $1,100,000 or…
A: Suzan's expected payoff if she chooses Option B (receiving 4% of the movie's profits) is…
Q: (Related to Checkpoint 11.1) (Net present value calculation) Dowling Sportswear is considering…
A: Net present value (NPV) of an investment refers to the variance between the initial investment or…
Q: Consider the following sets of investment projects n(years) A(S) B($) C($) D($) 0 -3,500 -5,800…
A: Equivalent Annual Worth (EAW) translates the net present value of an investment into an annual…
Q: Dog Up! Franks is looking at a new sausage system with an installed cost of $465,000. This cost will…
A: Initial cost = $465,000Working capital = $27,000Salvage value = $61,000Savings = $143,000Tax rate =…
Q: Windhoek Mines, Limited, of Namibia, is contemplating the purchase of equipment to exploit a mineral…
A: The NPV of a project refers to the measure of the project's profitability calculated by discounting…
Q: Which of the following break-even analyses yields a negative net present value? I. accounting…
A: Break-even analysis is a financial technique used to determine the point at which revenue equals…
Q: Raph Inc. needs someone to supply it with 1,000,000 planks of wood per year to support its…
A: The lowest bid price is the selling price that will earn the lowest required rate of return after…
Q: ABC Co is considering the launch of a new widget. If the product goes directly to the market, there…
A: b. Hire the consulting firm, as it provides the highest expected payoff.Explanation:To analyze this…
Q: Agnes is 40 years old. She wants to know how much she should be saving each year for retirement.…
A: The objective of the question is to calculate the amount Agnes will have saved by the time she is 60…
Q: Summit Systems will pay a dividend of $1.48 this year. If you expect Summit's dividend to grow by…
A: As per the constant dividend growth model price of the stock will be equal to the present value of…
Q: vvk.4
A: The objective of the question is to find out the exchange rate (cross rate) of the Egyptian pound to…
Q: Cost of debt. Dunder-Mifflin, Inc. (DMI) is selling 600,000 coming year. The bond will pay a coupon…
A: Number of bonds600,000600,000600,000600,000Par value$100.00$100.00$100.00$100.00Coupon…
Q: What is the profitability index of a project that costs $10, 000 and provides cash flows of $ 3,500…
A: Initial Cost = ic = $10,000Cash Flow for year 1 and 2 = cf12 = $3500Cash Flow for year 3 and 4 =…
Q: XYZ Inc. is deciding whether to buy a new building. The building will increase cash flows by…
A: The Net Present Value (NPV) of the project, assuming it is started today, is $29,081,382.32. …
Q: a. Calculate the payback period. (Do not round intermediate calculations and round your answer to 3…
A: Internal Rate of Return (IRR) : It is used the company wants to decide whether to accept the…
Q: Luther Industries has 25 million shares of common stock outstanding, trading at $18 per share. In…
A: The objective of this question is to calculate the effective or after-tax cost of debt for Luther…
Q: A client would also like you to estimate the value of a private company in which she has invested.…
A: Using the PE benchmark approach, the value of this company would be calculated using the…
Q: The common shares of Twitter, Incorporated (TWTR) recently traded on the NYSE for $69 per share. You…
A: Stock price = $69Strike price = $74Interest rate = 2.7%Volatility = 59%
Q: Alexander buys AXP for $20 per share. Two years later, Alex sells AXP for $25 per share. In the…
A: Holding period return:Holding Period Return (HPR) is a measure used to assess the performance of an…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Cash conversion cycle a. is longer if you decrease the level of your inventories. b. is longer if you increase the volume of your payables. c. is calculated in percentage. d. is shorter if customers are paying by cash (ceteris paribus).When cash flow frequency or compounding frequency (or both) is not annual:a. We are unable to compare the alternatives b. We must annualize all cash flows and compounding frequencies c. We can use the period interest rate, which divides the nominal annual interest rate by the number of interest periods per year d. We must annualize all cash flows and use the nominal annual interest rate.1.How much is the average daily collections? 2. How much is the increase in the average cash balance due to the three-day reduction in the collection float if the new system is adopted? 3. How much is the gross benefit (annual return on the investment of increase in the average cash balance) of the lockbox system? 4. Should the company make the investment and adopt the lockbox system? ○Yes or No?
- Solve, a. Calculate the IRR for each of the three cash-flow diagrams that follow. Use EOY zero for (i) and EOY four for (ii) and (iii) as the reference points in time. What can you conclude about “reference year shift” and “proportionality” issues of the IRR method? b. Calculate the PW at MARR=10 % per year at EOY zero for (i) and (ii) and EOY four for (ii) and (iii). How do the IRR and PW methods compare?National Co.’s evaluation of its cash outlay required indicates that it needs 500,000 for the year. Regardless of the amount. It incurs 30 to convert marketable securities to cash. The marketable securities earn an annual rate of 3%. Potter does not maintain buffer cash How much is the optimal transaction size?How much is the average cash balance?How much is the annual holding cost as a result of keeping cash on hand?How many transactions should be there in a year?1. How much is the average daily collections? Format: 111,111 2. How much is the increase in the average cash balance due to the three-day reduction in the collection float if the new system is adopted? Format: 1,111,111 3. How much is the gross benefit (annual return on the investment of increase in the average cash balance) of the lockbox system? Format: 11,111 4. Should the company make the investment and adopt the lockbox system? Yes or No
- Refer to the accompanying cash-flow diagram (see Figure), and solve for the unknown quantity in If G = $1,000, N = 12, and i = 10% per period, thenF = ? that makes the equivalent value of cash outflows equal to the equivalent value of the cash inflow, F.Net present value:a) is greater if cash receipts occur later rather than earlier.b) is greater if cash receipts occur earlier rather than later.c) is revenue minus fixed cost.d) is preferred over break-even analysis.c) is greater if $100 monthly payments are received in alump sum ($1,200) at the end of the year.Consider the following cash flows: Year Cash Flow 0 –$ 32,000 1 14,200 2 17,500 3 11,600 a. What is the NPV at a discount rate of zero percent? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What is the NPV at a discount rate of 10 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the NPV at a discount rate of 20 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the NPV at a discount rate of 30 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
- PRS Corporation uses one of the cash conversion models to manage its cash account. Recently, someone asking how sensitive is the solution for the return point and upper limit to changes in the conversion cost, the variance of daily net cash flow and the daily opportunity cost rate. The values that are currently being used are $50 conversion cost, $2 million daily net cashflow variance and 10% annual opportunity cost. i) Compute the return point using current values. ii) Compute the upper limit using current values iii) Simultaneously increase each of the three (3) variables values used by 50% and recalculate the return point and upper limit. iv) Discuss the sensitivity of the model to changes in the value of the input variables. NB. i, ii and iii have been answered already. Please answer question iv.PRS Corporation uses one of the cash conversion models to manage its cash account. Recently, someone asking how sensitive is the solution for the return point and upper limit to changes in the conversion cost, the variance of daily net cash flow and the daily opportunity cost rate. The values that are currently being used are $50 conversion cost, $2 million daily net cashflow variance and 10% annual opportunity cost. i) Compute the return point using current values. ii) Compute the upper limit using current values iii) Simultaneously increase each of the three (3) variables values used by 50% and recalculate the return point and upper limit. iv) Discuss the sensitivity of the model to changes in the value of the input variables.Please answer the questions What would be the net change in the cash conversion cycle if the year is 365 days long? Answer it with complete solutions and explanations if needed. Thank you
