What annual increase in income would your firm realize

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1. Your firm has $45.0 million invested in accounts receivable, which is 90 days of net revenues. If this value could be reduced to 50 days, what annual increase in income would your firm realize if the increase in cash could be invested at 7.5 percent?

2. Use the following information to answer questions 3, 4 and 5:
You have been asked to establish a pricing structure for radiology on a per-procedure basis. Present budgetary data is presented below:

Budgeted Procedures 10,000

Budgeted Cost $400,000

Desired Profit $80,000

3. What rate must be set to generate the required $80,000 in profit in the preceding example?

4. Assume that the only change in the original example data is that Blue Cross raises their discount to 20 percent. What price should be set?

5. You wish to retire a $10,000,000 bond that can be called in 5 years for 110 percent of par value, or $11,000,000. You also need to make year-end interest payments of $700,000 per year in each of the next five years. If you can invest money at 8 percent, how much money must you set aside today to meet these obligations?

Reference no: EM131014443

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