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1. ABC Inc. currently grants credit terms net 25. It is considering a new policy that involves a more stringent credit policy: net 20. As a result, the price of its product will stay the same at $45. The expected sales will decrease by 2,000 per year to 10,000 units. Variable costs will remain at $37 per unit and bad debt losses can be reduced by $1,000 per year to $2,000. ABC Inc. will finance the additional investment in receivables using its line of credit, which charges 6.5 percent interest after tax, and its tax rate is 40 percent. Should ABC Inc. switch to the new policy?
2.Calculate the effective annual cost of a one-year $1,000,000 operating line of credit. The firm borrowed 600,000 for the first 5 months of the year and reduced the loan amount to $500,000 for the rest of the year. The quoted interest rate is 7.5 percent and there is a 0.8 percent commitment fee on the unused portion.
How much would you have to invest yearly to completely fund annuity in 50 years, again suppose a 6% monthly compounding rate?
the widget industry in springfield is competitive with numerous buyers and sellers. consumers dont differentiate among
If Mr. Johnson sold the house just after his 36th payments for $200,000.00, how large a check did he receive?
What is the reduction in outstanding cash balances as a result of implementing the lockbox system?
Is it ever appropriate in the business world to hold a superior liable for a subordinate's criminal action (as may often be the case in a military structure), or should we each just be responsible for our own actions?
However, with the warrants attached the bonds will pay a 6% annual coupon and can still be issued at the par value of $1,000. There are 30 warrants attached to each bond. What is the value of each warrant?
Illustrate the functions and roles played by financial markets and institutions, particularly as they relate to the flow of funds from lenders to borrowers within the global financial system
how is the marginal cost of the various component capital sources
Sutton can also lease the equipment for 5 end-of-year payments of $1,790,000 each. How much larger or smaller is the bank loan payment than the lease payment? Note: Subtract the loan payment from the lease payment.
choose a brand that you feel loyal to and describe the product and its branding and packaging strategies. analyze the
assess how the required rate of return on investment for a u.s. investor in common stocks may differ from the required
Holdup Bank has an issue of preferred stock with a $6.15 stated dividend that just sold for $98 per share. What is the bank's cost of preferred stock?
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