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A firm is evaluating an accounts receivable change that would increase bad debts from 2% to 4% of sales. Sales are currently 50,000 units, the selling price is $20 per unit, and the variable cost per unit is $15. As a result of the proposed change, sales are forecast to increase to 60,000 units.a. What are bad debts in dollars currently and under the proposed change?b. Calculate the cost of the marginal bad debts to the firm.c. Ignoring the additional profit contribution from increased sales, if the proposed change saves $3,500 and causes no change in the average investment in accounts receivable, would you recommend it? Explain.d. Considering all changes in costs and benefits, would you recommend the proposed change? Explain.e. Compare and discuss your answers in parts c and d.Zero-balance account Union Company is considering establishment of a zero-balance account. The firm currently maintains an average balance of $420,000 in its disbursement account. As compensation to the bank for maintaining the zero-balance account, the firm will have to pay a monthly fee of $1,000 and maintain a $300,000 non–interest-earning deposit in the bank. The firm currently has no other deposits in the bank. Evaluate the proposed zero-balance account, and make a recommendation to the firm, assuming that it has a 12% opportunity cost.Cost of bank loan Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%, payable at maturity.a. How much interest (in dollars) will the firm pay on the 90-day loan?b. Find the effective 90-day rate on the loan.c. Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 90 days throughout the year under the same terms and circumstances.
The new shares were distributed on December 10, 2013. Make the journal entries to record the declaration and distribution of the stock dividend.
On August 1st 2009 USD/SAR exchange rate was SAR9.20 per USD. On August 1st 2010 (1 year later), USD/SAR rate moved up to USD/SAR9.80.
Complete the ratio analysis using cross-sectional analysis and trend analysis for Company J, using the market data in the template.
In the model of banks as providers of liquidity insurance, I examined four cases. Autarky, a market economy with borrowing and lending, the Pareto optimum and how banks can achieve the Pareto optimum.
Use the data to estimate the current risk-free real rate of interest.
In a non instanteneous receipt model, daily demand is 55 units and daily production is 120 units, Co=$70 and Cc=$4 per unit per year. What is the maximum inventory level? (Assume that the facility is open 365 days per year.
What was the firm's Economic Value Added (EVA), that is, how much value did management add to stockholders' wealth during 2012? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nea..
Alex Bell has just retired from the telephone company. His total pension funds have an accumulated value of $200,000 and his life expectancy is 16 more years. HIs pension fund manager assumes he can earn a 12% return on his assets.
Rima's Bank offers to lend you the $50,000, but it will charge 6.0%, simple interest, with interest paid at the end of the year. What's the difference in the effective annual rates charged by the two banks?
Which is the best measure of risk for a single asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?
A payday loan company charges 6 percent interest for a two-week period. What would be the annual interest rate from that company?
identify and assess three sources of growth option value for your chosen organization I will appreciate your assistance with this project. Some Ideas how to approach it.
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