User Account

All Pages

Evaluate the proposed zero balance account

Assignment Help Finance Basics
Reference no: EM131109370

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.

Reference no: EM131109370

Questions Cloud

Prepare sampsells 2010 entry to record postretirement : For 2010, Sampsell Inc. computed its annual postretirement expense as $240,900. Sampsell's contribution to the plan during 2010 was $180,000. Prepare Sampsell's 2010 entry to record postretirement expense.
What do you suggest alexis do about the manner : What can Alexis do regarding the handling of her current balances? What do you suggest that she do with her monthly surpluses? What do you suggest alexis do about the manner in which she pays her bills?
How will lahey report these multiple plans : Lahey Corp. has three defined-benefit pension plans as follows. How will Lahey report these multiple plans in its financial statements?
Nortons other comprehensive income : Comprehensive income. Net income for 2010 is $26,000; no amortization of gain or loss is necessary in 2010.
Evaluate the proposed zero balance account : 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.
What amount of cash will be made available : What amount of cash will be made available for other uses under the lockbox system? What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system?
Would it be economically advisable for the firm : How much collection float (in days) does the firm currently have? If the firm’s opportunity cost is 11%, would it be economically advisable for the firm to pay an annual fee of $16,500 to reduce collection float by 3 days? Explain why or why not.
What additional profit contribution from sales : What additional profit contribution from sales will be realized from the proposed change? What is the cost of the marginal investment in accounts receivable?
Evaluate this decision, and make a recommendation : The firm is currently selling 12,000 units but believes that as a result of the proposed change, sales will decline to 10,000 units. The sale price per unit is $56, and the variable cost per unit is $45. The firm has a required return on equal-risk i..

Reviews

Write a Review

Finance Basics Questions & Answers

  Annual growth rate would be less than 10%. true or false

If a firm's earnings per share grew from $1 to $2 over a 10-year period, the total growth would be 100%, but the annual growth rate would be less than 10%. True or false? Explain.

  What is the operating cash flow of the project

The company has a marginal tax rate of 35%. What is the operating cash flow of the project using the tax shield approach?

  Find the probability that the machine will be profitable

Find the probability that the machine will be profitable (that is its NPV > 0). Should the hospital buy the machine?

  Describe how you would calculate the cost of common stock th

1. Describe how you would calculate the cost of common stock that you would use in the WACC formula. 2. How does the CAPM compare to the APT? 3. Is the CAPM a linear model? Please explain.

  In october the company produced 4500 units using 6000

an automobile parts company has a standard material price of 2 per pound. in october the company produced 4500 units

  How much was the firms taxable income

It had $8,000 of bonds outstanding that carry a 14% interest rate. How much was the firm's taxable income, or earnings before taxes (EBT)?

  How can your firm arrange the business to be most profitable

Explore the expected GDP growth of each country and the forecast exchange rates to the U.S. dollar. Based on the forecast exchange rate with the U.S. dollar in 1 and 2 years, should the $300 million investments be paid for immediately, hedged, or pai..

  What is the effective annual interest rate

What is the effective annual interest rate that you are being charged by the bank? Hint: Use your financial calculator's TVM keys and solve for i.

  What is the best estimate of the stock current market value

The required return on this low-risk stock is 9.00%. What is the best estimate of the stock's current market value?

  A generous university benefactor has agreed to donate a

a generous university benefactor has agreed to donate a large amount of money for student scholarships. the money can

  Each summary must be at least one double-spaced typewritten

each student is required to summarize ten articles from journals found online.each summary must be at least one

  What real rate of return did she earn on her investments

Last year, Rita earned 11.6 percent on her investments while U.S. Treasury bills yielded 3.8 percent and the inflation rate was 3.1 percent. What real rate of return did she earn on her investments last year?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd