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BigBlue Prints has sales this year of $15 million under its current credit policy. The present terms are net 30; the average collection period is 60 days; and the bad debt loss percentage is 5 percent. Also, BigBlue’s opportunity cost is 15 percent, and its variable costs total 30 percent of sales. Since BigBlue wants to improve its profitability, a proposal has been made to offer a 2 percent discount for payment within 10 days; that is, change the credit terms to 2/10, net 30. The consultants predict that sales would increase by $600,000, and that 50 percent of credit customers would take the discount. The new average collection period would be 45 days, and the bad debt loss percentage on credit sales would fall to 4 percent. Perform a complete analysis to justify whether or not the proposed changes in credit terms should be implemented.
research a company of your choice and locate the latest financial statements published by the company.for the following
Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 1.6% + 0.70RM + eA RB = –1.8% + 0.9RM + eB σM = 22%; R-squareA = 0.20; R-square B = 0.15
Thomas Brothers is expected to pay a $2.6 per share dividend at the end of the year (that is, D1 = $2.6). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock, rs, is 19%. What is the stock's curr..
Stock has a required return of 12%; the risk-free rate is 3.5%; and the market risk premium is 6%. What is the stock's beta? If the market risk premium increased to 7%, what would happen to the stock's required rate of return? Assume the risk-free ra..
Black water Corp just issued zero-coupon bonds with a par value of $1,000. The bond has a maturity of 25 years and a yield to maturity of 8.29%, compounded semi-annually. What is the current price of the bond?
Choose one stock index (or one sector index) and one bond index. Go to yahoo/Finance and download 5 years of monthly data into your Excel for each stock index (Sector index) and bond index. Calculate the monthly rate of return (P1-P0/P0) for stock an..
1 explain interest rate swaps and stock options.2 explain the role that credit default swaps played in the financial
in this assignment you will create a risk management plan. you have a budget of 100000 and a timeline of six 6 months
Determine the annual payment on a $500,000, 12 percent business loan from a commercial bank that is to be amortized over a five-year period.
Consider two mutually exclusive projects with the following cash flows: Project S is a 4 year project with initial (time 0) cash outflow of 3000 and time 1 through 4 cash inflows of 1500, 1200, 800 and 300 respectively. Project L is a 4 year project ..
A stock has a correlation with the market of 0.49. The standard deviation of the market is 25%, and the standard deviation of the stock is 33%. What is the stock's beta?
All of the following are ISO commercial crime coverage exclusions except. A financial instrument that's value is based on an underlying security or commodity is called a/an?
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