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

What is its weighted average cost of capital

If you were a manager of a company, which of the three right side components of the DuPont Identity would you want to increase and which would you want to decrease, other th

What is the net profit for the put option writer

Consider two periods: The period before expiration (denoted by "Period 0") and expiration period ("Period T"). You purchased an option with the strike price of $20. The spot

Investment time horizon is a bit long

A long-term bond of the government of the United States is always totally safe. Ths is in terms of dollars received. However, there seems to be a problem where the price of

What is the expected value of new ghana''s property losses

Suppose PC Inc, New Ghana's insurance carrier, charges a 40% load when determining its property and casualty insurance premiums.  What would they charge New Ghana for proper

What is the ea financing structure

How EA finance these plans,? What is the EA financing structure? Are the risk and the yield the same? Why did EA choose this structure? What other Islamic finance products t

Describe the accounting treatment that appears to be more

Describe the accounting treatment (as required by the Codification) that appears to be more appropriate given the circumstances. State any assumptions that you make in reachin

What is the estimated monthly contribution margin per cable

What is the estimated monthly contribution margin per cable subscriber for CableVision in 2016? What are the estimated total monthly fixed costs for CableVision in 2016. What

Will short term creditors agree to invest in this company

With this company's financial statement, what has changed over the years. Is it negative or positive? Will investors invest in this company? Will short term creditors agree to

Reviews

Write a Review

 
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