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004Fagins, a nationwide department store chain, currently processes all of its credit sales payments at its St. Louis headquarters. The firm is considering the establishment of a lockbox arrangement with a Los Angeles bank to process payments from its customers in 10 western states. Average mailing time for customers from this region would be reduced from 3 days to 1.5 days. In addition, check processing and clearing time would be reduced from 4 days to 2.5 days. Annual collections from the western region are $150 million. Establishment of this lockbox system would reduce the compensating balance requirement at the firm's St. Louis office by $30,000. Funds released by the lockbox arrangement can be invested elsewhere in the firm to earn 12 percent. The Los Angeles bank has agreed to process Fagins' customer payments "free of charge" provided that the firm maintains a minimum compensating balance of $1,500,000 in its account at the bank. What are the annual net benefits to Fagins of establishing a lockbox system with the Los Angeles bank (assume 365 days per year)?
The proposal will require that Capital Assets Corp. send technician for training at a cost of $5,000. The firm's marginal tax rate is 40 percent. How much is the initial cash outlay of the photocopy machine?
find where the cash flow effect of each of the following transactions are reported in the statement of cash flows
Demonstrate how you can use a TED (Treasury/Eurodollar) spread, which is a simultaneous long (short) position in a Eurodollar contract and short (long) position in the T-Bill contract, to create a position that will benefit from these views.
Discuss the Capital budgeting and what is the net present value of the costs of buying and operating the ambulance over its lifetime
butler corp paid a dividend today of 5 per share. the dividend is expected to grow at a constant rate of 6.5 per year.
What is the annual percentage rate on a loan with a stated rate of 2.25 percent per quarter?
From the start of 1999 to the start of 2009, the S&P 500 had a negative return. Does this mean the market risk premium we should use in the CAPM is negative?
grand adventure properties offers a 8 percent coupon bond with annual payments. the yield to maturity is 6.85 percent
The manufacture of a new cereal brand wants to conduct in-home product usages tests in Chicago.
If Bank One is provide a 30 year mortgage with and EAR of 5 3/8 percent. If you plan to borrow $150,000, Determine your monthly payment?
What is the difference between the present value of a future sum of money and the future value of a present sum of money? What is the significance of these concepts to economics?
for 2012 everyday electronics reported 22.5 million of sales and 18 million of operating costs including depreciation.
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