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Lockbox system Eagle Industries believes that a lockbox system can shorten its accounts receivable collection period by 3 days. Credit sales are $3,240,000 per year, billed on a continuous basis. The firm has other equally risky investments that earn a return of 15%. The cost of the lockbox system is $9,000 per year. (Note: Assume a 365-day year.)
a) What amount of cash will be made available for other uses under the lockbox system?
b) What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system?
On January 2013, Professor Lee buys a house. Here is the information. What is the effective interest rate? If from January 2013, Professor Lee plans to sell his house after 15 years. What is the effective interest rate for Professor Lee in Jan 2013?
its been 2 months since you took a position as an assistant financial analyst at caledonia products. although your boss
A hospital incurs $10 million of cost to treat Medicaid patients and receives $7 million in payment. Actual charges for these Medicaid patients were $20 million. The net community benefit expense that wold be reported in Schedule H of IRS form 990 wo..
Titan Mining Corporation has 9.5 million shares of common stock outstanding and 390,000 5 percent semi-annual bonds outstanding, par value $1,000 each. The common stock currently sells for $43 per share and has a beta of 1.25, and the bonds have 15 y..
BVA Inc. has two bond issues outstanding; each with a par value of $1,000 information about each is listed below. Suppose market interest rates rise 1 percentage point across the yield curve. What will be the change in price for each of the bonds? Do..
Perpetuity Values/ Bob's Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $700 per year forever. If the required return on this investment is 12 percent, how much will you pay for the policy?
Plush Pilots, Inc. has balance sheet equity of $5.2 million. At the same time, the income statement shows net income of $743,600. The company paid dividends of $423,852 and has 130,000 shares of stock outstanding. If the benchmark PE ratio is 21, wha..
George Jefferson established a trust fund that provides $170,500 in scholarships each year in perpetuity for worthy students. The trust fund earns a 4 percent annual rate of return. How much money did Mr. Jefferson contribute to the fund assuming tha..
Suppose the average return on an asset is 11.5 percent and the standard deviation is 20 percent. Further assume that the returns are normally distributed. Use the NORMDIST function in Excel to determine the probability that in any given year you will..
Which of the following does not need to be known in order to compute the p-value? a. knowledge of whether the test is one-tailed or two-tailed b. the value of the test statistic c. the level of significance d. All of these are needed.
For the first part of this plan, we need to calculate the rate of return of our retirement savings will earn until we reach our retirement age (67 years old)
You’re prepared to make monthly payments of $250, beginning at the end of this month, into an account that pays 10 percent interest compounded monthly. How many payments will you have made when your account balance reaches $65,000?
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