How much free cash would hgc generate if it implemented the

Assignment Help Finance Basics
Reference no: EM13984979

Hardin-Gehr Corporation (HGC) began operations 5 years ago as a small firm serving customers in the Detroit area. However, its reputation and market area grew quickly. Today HGC has customers all over the United States.

Despite its broad customer base, HGC has maintained its headquarters in Detroit and it keeps its central billing system there. On average, it takes 5 days from the time customers mail in payments until HGC can receive, process, and deposit them. HGC would like to set up a lockbox collection system, which it estimates would reduce the time lag from customer mailing to deposit by 3 days-bringing it down to 2 days. HGC receives an average of $1,400,000 in payments per day. 

a. How much free cash would HGC generate if it implemented the lockbox system? 

b. Would this be a one-time cash flow or a recurring one, assuming the company ceases to grow? How would growth affect your answer? 

c. If HGC has an opportunity cost of 10%, how much is the lockbox system worth on an annual basis? 

d. What is the maximum monthly charge HGC should pay for the lockbox system? 

Reference no: EM13984979

Questions Cloud

Determine the speed of the car : The acceleration of a race car for the first few seconds of the race can be approximated. What is the speed of the car 1.93 s after it starts from rest?
Conduct a hypothetical life cycle assessment : Choose a product that negatively affects the environment, assuming a linear flow of materials. Then, use a cyclical materials flow approach, and conduct a hypothetical life cycle assessment (LCA), pointing out at least two preventive initiatives that..
What is the shape of graph of distance vs speed for constant : What is the shape of graph of distance vs speed for constant acceleration?
Nonlinear multiple regression model coefficients : What is the different between interpretation of coefficient in SLRM and MLRM? How does it relate to omitted variable bias? How about a linear versus nonlinear multiple regression model coefficients? (quadratic). What is the role of controls?
How much free cash would hgc generate if it implemented the : How much free cash would HGC generate if it implemented the lockbox system? Would this be a one-time cash flow or a recurring one, assuming the company ceases to grow? How would growth affect your answer? If HGC has an opportunity cost of 10%, how mu..
Log-linear model and log-log model : How do you choose between log-linear model and log-log model? How about linear log-linear? And how about linear-log and log-log? Why? How do you interpret coefficients of a A) log-linear B) log-log and C) linear-log model?
What are the differences between recours : What are the differences between recourse, nonrecourse, and qualified concourse liabilities? Which liabilities are considered at-risk?
Find the market-clearing wage and employment level : Consider a labor market where the demand for a particular category of labor is given by the equation LD = 20 – 2W. Suppose that the supply curve of workers in this market who are also native-born citizens is given by LN = 2W, while the supply curve o..
A geotechnical engineer is evaluating the stability : A geotechnical engineer is evaluating the stability of the slope in Figure 13.4 below.  This evaluation is considering the potential for a shear failure along the shear surface shown.  The soil has drained friction angle of 30 degrees and no cohesion..

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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