User Account

All Pages

How many dollars will the cash management system free up

Assignment Help Financial Management
Reference no: EM131515655

Assignment: Cash Management

Solve the following problem. Norma's Cat Food of Shell Knob ships cat food throughout the country. Norma has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by two and one-half days. Furthermore, the cash management department of her bank has indicated to her that she can defer her payments on her accounts by one-half day without affecting suppliers. The bank has a remote disbursement center in Iowa.

a. If the company has $5 million per day in collections and $3 million per day in disbursements, how many dollars will the cash management system free up? Justify your answers.

b. If the company can earn 8 percent per annum on freed-up funds, how much will the income be? Justify your answers.

c. If the annual cost of the new system is $800,000, should it be implemented? Explain why or why not.

Consider setting your paper up as follows:

• Introduction
• Answer A- Cash management system will free up and justified the response
• Answer B- Correctly calculated income and justified response
• Answer C- Clearly explained if the new system should be implemented
• Conclusion.

Reference no: EM131515655

Questions Cloud

Develop a set of strategic recommendations : Identify a strategic problem that could be the cause of that negative media attention - Develop a set of strategic recommendations arising
How many shares will company repurchase as a result of debt : How many shares will the company repurchase as a result of the debt issue? How many shares of common stock will remain after the repurchase?
Importance and relevance of health economics : In this Journal entry, examine the importance and relevance of health economics and how it relates to an individual's health.
Discuss the dilemma that jobe now faces : Why is it even more important that project team members work well together on international projects such as Project Abu Dhabi
How many dollars will the cash management system free up : If the company has $5 million per day in collections and $3 million per day in disbursements, how many dollars will the cash management system free up?
Describe preferred timing and objectives of business plan : Describe the preferred timing and objectives of your business plan. Include an Excel spreadsheet with critical decisions and dates
Of a marketing research committee : An 875-word research paper as part of a marketing research committee for your organization about current microeconomic thought and theory.
What is the change in net working capital : What is the Net Working Capital for 2012? What is it for 2011? What is the Change in Net Working Capital (NWC)?
Explain the interpersonal communication skills : Explain the three interpersonal communication skills of listening, feedback and questioning - critically discuss the benefits of applying these skills

Reviews

Write a Review

Financial Management Questions & Answers

  Market is in equilibrium-what is the market capitalization

Dora Corp. is an all equity firm and its net income is projected to grow 20% in year 1, 25% in year 2, and 30% in year 3, and then 5.5 constant growth thereafter. The retention ratio is held constant at 60% and year 0 net income is 70Millioin. The fi..

  Firm expects to pay dividends

A firm expects to pay dividends at the end of each of the next four years of $2.00, $1.50, $2.50, and $3.50. If growth is then expected to level off at 8 percent, and if you require a 14 percent rate of return, how much should you be willing to pay f..

  What is the value of this stock today if the required return

Gorgon Stoneworks Co. does not expect to pay any dividends for the next three years. Four years from now, the firm hopes to pay $.61 a share and double that amount each year for the following three years. After that, the dividend is expected to incre..

  What is the maximum that should be spent on steel

A small bridge can be constructed with either wood or steel. Steel construction has a longer life than that of concrete. The cost of the wood construction would be $10,500/linear ft and would last 12 years. Using breakeven analysis, what is the maxim..

  Determine the value of ending inventory

Determine the value of ending inventory if the sales value at splitoff method is used for product costing. Round to three decimal places when necessary. (10points)

  Conflicts between debt holders and equity holders

Equity can be viewed as a call option and debt holders can be viewed as the owner of the firm who writes a call option. In addition, debt can be viewed as a portfolio of risk free debt and a short position in a put option. Provide a brief discussion ..

  Dividends are expected-what is current value of one share

Nu-Tech stock's last annual dividend was $1.10 a share. Dividends are expected to increase by 25 percent for the next two years and then increase at a constant 4 percent annually. The required return on this high-risk stock is 18.5 percent. What is t..

  Period from the start of cash outflow for producing product

The ________ is the period from the start of cash outflow for producing a product or service until the associated cash inflow materializes from the sale of that product or service. The ________ starts at the time production begins and ends with the c..

  Discuss how you have planned for your retirement so far

Discuss how you have planned for your retirement so far, whether you are on track to reaching your goals, and what changes you need to make. Are there any specific ideas that will help you reach your goals and if so, discuss.

  Capitalization increase or decrease shareholder wealth

Barns Brother's capital structure is 100% equity and 0% debt. Currently there are 100,000 shares of common stock outstanding. Barns has decided to change its capital structure by buying back shares of common stock in a recapitalization effort. How mu..

  What was the net income

Computer World Inc paid out $22.5 million in total common dividends and reported $278.9 million of retained earnings at year end. The prior year's retained earnings were $212.3 million. What was the net income? Assume all the dividends were actually ..

  Firm is considering investing in project with the cash flows

Suppose your firm is considering investing in a project with the cash flows shown below, Use the PI decision rule to evaluate this project.

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