+1-415-670-9189
info@expertsmind.com
Considering relaxing its credit standards to encourage sales
Course:- Financial Management
Reference No.:- EM13942953




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Financial Management

Pueblo Corp. is considering relaxing its credit standards to encourage more sales. As a result, sales are expected to increase 15% from the current level of 300 units per year. The average collection period is expected to increase to 35 days from 25 days and bad debts are expected to double the current 1% level. The sale price per unit is $850, the variable cost per unit is $650 and the average cost per unit at the 300 unit level is $700. The firm's required return on investment is 20%. What is the cost of marginal investments in accounts receivable under the proposed plan? (Assume 365-day year)




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Hybrid cars are touted as green alternatives; however, the financial aspects of hybrid ownership are not as clear. Consider a hybrid model that has a list price of $5,500 (inc
You are considering borrowing 1 million SEK for one month at an APR of 12%. The bank will require a (no-interest) compensating balance of 3% of the face value of the loan and
A six month call with strike price of $50 costs $5. A six month put with a strike price of $40 costs $3. The current stock price is $48. A trader uses the options and stock to
You need a $500,000 financing package. $100,000 at 5%, 30 Years , $200,000 at 6.5%, 20 Years, $200,000 at 8% 10 Years, (notice 1. that these loans are not amortized loan which
The firms of the economy produce $100,000 per year in pre-tax and interest cash flows in perpetuity. This production is riskless. The corporate tax rate is 30%. Verbally chara
A group of private investors purchased a condominium complex for $2 million. They made an initial down payment of 10% and obtained financing for the balance. If the loan is to
The James Company has issued bonds that have a 6.75% coupon rate and a par value of $1,000. The coupon amount is payable annually in arrears. The bonds mature 17 years from no
You are given the following information regarding prices for a sample of stocks. Construct a price-weighted index for these three stocks, and compute the percentage change in