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Microbiotics currently sells all of its frozen dinners cash on delivery but believes it can increase sales by offering supermarkets 1 month of free credit. The price per carton is $170, and the cost per carton is $100. The unit sales will increase from 1,120 cartons to 1,180 per month if credit is granted. Assume all customers pay their bills and take full advantage of any credit period offered.
a. If the interest rate is 1% per month, what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Change in total monthly profit $
b. If the interest rate is 1.5% per month, what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Change in total monthly profit $
c. Assume the interest rate is 1.5% per month but the firm can offer the credit only as a special deal to new customers, while existing customers will continue to pay cash on delivery. What will be the change in the firm's total monthly profits on a present value basis under these conditions? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Change in total monthly profit $
Marvin & Co. expects its EBIT to be $49,000 every year forever. The firm can borrow at 8 percent. Meyer currently has no debt, and its cost of equity is 11 percent. If the tax rate is 35 percent, what is the value of the firm? What will the value be ..
The after-tax profit margin is forecasted to be 3%, and the forecasted payout ratio is 60%. Use the AFN equation to forecast Brous-sard's additional funds needed for the coming year.
Please find the number of days to maturity (n) for a U.S. Treasury Bill with an investment rate of 2.48% (or .0248),
A 15-year, $1,000 face value bond issued by Clayton Enterprises pays interest semiannually on April 1 and October 1. Assume today is November 1. What will the difference, if any, be between this bond's clean and dirty prices today? no difference one ..
Which of the following are interrelated steps in financial statement analysis?
Suppose that you and your brother want to purchase 25 acres of land to start a Christmas tree farm. The owner is willing to finance 75 % of the $100,000 purchase price at 12 % annual interest with amortization over 8 years. What will be the annual pa..
Identify what the sources of costs might be. Actual costings are not part of this exercise. Always be on the lookout for the hidden costs that can turn an apparent saving into an actual loss.
What annual rate of return has this investor earned?
Blue Company has 12,000,000 in sales. COGS are 40% of sales. Operating costs are $1,200,000plus depreciation expense of $80,000 and interest expense $80,000. Tax rate is 40%. They have 1,000,000 shares of stock outstanding. What is their net income? ..
Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have 715,000 shares of stock outstanding. Under Plan II, there would be 465,000 shares of stock outstan..
A project is expected to create operating cash flows of $33,500 a year for three years. The initial cost of the fixed assets is $69,000. These assets will be worthless at the end of the project. An additional $5,000 of net working capital will be req..
Using the average daily rates for the months of Janurary through May 2016, a student created a simple linear regression model for data documenting public transportation usage. The single causal factor considered was a linear trend. The resulting regr..
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