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You work for a company that extends trade credit to customers. Currently your variable cost ratio is 65% and the annual rate of interest set by the company is 4% and the terms are a 30-day net. It costs you $0.07 on the dollar for administrative costs.
Your monthly credit extension is $400,000 and you know (based on previous calculations) that 30% of your customers pay within 30 days, 30% pay within the 60-day net period, 25% pay within a 90-day period and the last 15% pay in a 120-day period.
Calculate the average collection period. If the current industry standard collection period is 40 days, determine if an early payment credit is worth implementing. How great of a discount should you provide?
The opportunity to invest in a project can be thought of as a 3 year real option that is worth $450 million with an exercise price of $700 million.
Computation of net income and annual rate of return and NPV and Continuing the previous problem and Apricot Company had sales
At the time these betas were developed, reasonable estimates for the risk-free rate, RF, and the required rate of return on the market, R(Rm), were 6.5 percent and 13.5 percent, respectively.
The necessary equipment can be purchased for $32.5 million and will be depre- ciated on a seven-year MACRS schedule. It is be- lieved the value of the equipment in five years will be $3.5 million.
Divedends are expected to grow at a rate of 5.2% per year into the indefinite future. If the firm tax rate is 30% what discount rate should you use to evaluate the equipment purchase
Fielding has no short-term as of March 1st 2008. Assume that the interest rate on short term borrowing is 1% per month. What is fielding's projected loss for april?
In addition, the company had an interest expense of $215,300 and a tax rate of 30 percent. (Ignore any tax loss carryback or carryforward provisions.) What is Belyk's net income?What is Belyk's operating cash flow?
Compare and contrast the uses of break-even analysis and sensitivity analysis in evaluating project risk.
After this initial period of super growth, the rate of increase in the dividend should decline to 8 percent. If you want to earn 12 percent on investments in common stock, what is the maximum you should pay for this stock?
Firms A and B have identical gross profit margins but B has a smaller operating profit margin. Which of the following is the most likely explanation?
Computation of the current price of the bond and What is the value of the same bond if the interest is paid semi-annually
Bond X is a premium bond making annual payments. The bond pays an 8 percent coupon, has a YTM of 6 percent, and has 13 years to maturity. Bond Y is a discount bond making annual payments.
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