Cost trade-offs in short-term financial management

Assignment Help Financial Management
Reference no: EM131178460

Cost Trade-Offs in Short-Term Financial Management Geet Industries wants to install a just-in-time (JIT) inventory system in order to significantly reduce its in-process inventories. The annual cost of the system is gauged to be $91,000. The financial manager estimates that with this system, the firm's average inventory investment will decline by 37% from its current level of $2.05 million. All other costs are expected to be unaffected by this system. The firm can earn 14% per year on equal-risk investments. What is the annual cost savings expected to result from installation of the proposed JIT system? Round your answer to the nearest whole dollar. $ per year Should the firm install the system?

Reference no: EM131178460

Questions Cloud

What do you think of amazons move to online grocery delivery : What do you think of Amazon's move to online grocery delivery - Does it give the company a competitive advantage?
What is the revised cost reduction percentage : What is the projected impact on the per unit demanufacturing cost of a 50% increase in training costs coupled with a 90% increase in transportation costs? What is the revised cost reduction percentage?
complete manual trial calculation of the IRR : You must provide one complete manual trial calculation of the IRR to demonstrate that you understand the process. Also provide an explanation of this opportunity cost. Failure to follow this instruction will attract a mark of zero
Inventory management calculate the average investment : Inventory Management Calculate the average investment in inventory for each of the following situations. Assume a 365-day year. The firm's annual sales were $16 million, its gross profit margin was 34%, and its average age of inventory is 49 days.
Cost trade-offs in short-term financial management : Cost Trade-Offs in Short-Term Financial Management Geet Industries wants to install a just-in-time (JIT) inventory system in order to significantly reduce its in-process inventories. The annual cost of the system is gauged to be $91,000.
What is the estimated value of the erosion cost : Foamsoft sells customized boat shoes. Currently, it sells 16,850 pairs of shoes annually at an average price of $79 a pair. It is considering adding a lower-priced line of shoes but will sell for $49 a pair. Foamsoft estimates it can sell 5,000 pairs..
Program the uses typedef-enumerated types : Write a C++ program the uses typedef, enumerated types, structures, and structure pointers where appropriate. Make sure the function String_To_MDY() assumes that the user correctly enters the date in the form mm/dd/yyyy.
Discuss the role of women in the late nineteenth century : Discuss the role of women in the late 19th century. In what ways were the roles, attitudes, and expectations for women changing -- cite a few specific examples?
What is the accounting break-even point in units per year : The Mini-Max Company has a new prospective 5-year project with an initial cost of $318,900, annual fixed costs of $45,200, variable costs per unit of $16.78, and a sales price of $29.95. The discount rate is 13 percent and the tax rate is 35 percent...

Reviews

Write a Review

 

Financial Management Questions & Answers

  What are the consequences of a bank

What are the consequences of a bank mistakenly pricing loans based on the historical cost of funds? Do they differ in a rising rate environment versus a falling rate environment?

  Not-for-profit acute care facility

General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services:

  What is after-tax dividend

A stockholder, James Bradley, receives $20,000. If James' tax rate on dividends in 15 percent, what is his after-tax dividend?

  Stock is expected to pay a dividend-calculate forward price

A stock is expected to pay a dividend of $2.20 per share in 1 months and in 4 months. The current stock price is $51, and the risk-free interest rate is 6% per annum with continuous compounding for all maturities. An investor has just taken a long po..

  Addition net working capital investments

Production of the implants will require $1,800,000 in net working capital to start and addition net working capital investments each year equal to 15 percent of the projected states sales increase for the following year. Total fixed costs are $2,500...

  Describe preferred timing and objectives of business plan

Based on the organization you selected, write a critical risk assessment and milestones schedule of 350-500 words (plus a spreadsheet) that addresses the following (guidelines): Describe the preferred timing and objectives of your business plan.

  Price of the flowers will increase

When Marilyn Monroe died ex-husband Joe DiMaggio vowed to place fresh flowers on her grave every Sunday as long as he lived. The week after she died in 1962, a bunch of fresh flowers that the former baseball player thought appropriate for the star co..

  What is required return on greens equity after restructuring

Green Manufacturing, Inc., plans to announce that it will issue $1.91 million of perpetual debt and use the proceeds to repurchase common stock. The bonds will sell at par with a coupon rate of 7 percent. Green is currently an all-equity firm worth $..

  How much money will you have in eight years

You are schedule to receive $10,000 in two years. When you receive it, you will immediately invest it for six more years in a savings account that earns 5% annually. How much money will you have in eight years?

  Initial cost of the hotel project for the use of this land

The Green Tomato purchased a parcel of land six years ago for $299,500. At that time, the firm invested $64,000 grading the site so that it would be usable. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land..

  What price will you bid for each stamp

Consider bidding for a project to supply 80 million postage stamps per year to USPS for the next 5 years. You have an idle parcel of land available at that cost $1 million 5 years ago, if the land was sold today, it would net you $1.2 million after t..

  Treasury bonds equals the one year yield plus

Due to a recession, expected inflation this year is only 3.25%. However, the inflation rate in Year 2 and thereafter is expected to be constant at some level above 3.25%. Assume that the expectations theory holds and the real risk-free rate (r*) is 2..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd