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J-Mart, a nationwide department store chain, processes all its credit sales payments at its suburban Detroit headquarters. The firm is considering the implementation of a lockbox collection system with an Atlanta bank to process monthly payments from its southeastern region. Annual credit sales collections from the region are $60 million. The establishment of the lockbox system would reduce mailing, processing, and check clearing time from 8 days currently to 3.5 days, reduce company processing costs by $25,000 per year, and reduce the compensating balance of its Detroit bank by $200,000. The Atlanta bank would not charge any fee for the lockbox service but would require J-Mart to maintain a $500,000 compensating balance. Funds released by the lockbox arrangement could be invested elsewhere in the firm to earn 15 percent before taxes. Determine the following:
a. The amount of funds released by the lockbox arrangement
b. The annual (pretax) earnings on the released funds
c. The annual net (pretax) benefits to J-Mart of establishing the lockbox system with the Atlanta bank
a manufacturer claims that the average tensile strength of thread a exceeds the average tensile strength of thread b by
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Determine why, given the advantages of international diversification, some firms choose not to expand internationally. Provide specific examples to support your response.
Explain why or why not. Assume end of year withdrawals
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1 from the information below compute the average annual return the variance standard deviation and coefficient of
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The Graham Ferries Ltd is considering the replacement of its existing fleet of its six steam ferrieswith three hydrofoils. The following estimates of costs, and so on, for each vessel have beencalculated
When computing the proportion of revenue that finds its way into profits, it is often appropriate to add back debt interest to net income.
evaluates projects that have above- or below-average risk. Data on the 7 projects are shown below. If these are the only projects under consideration, how large should the capital budget be?
The loan terms require monthly payments for 15 years at an annual percentage rate of 7.75% compounded monthly. What is the amount of each mortgage payment?
Your corporation has a marginal tax rate of 35% and has purchased preferred stock in another company. The before-tax dividend yield on the preferred stock is 12%. What is the company's after-tax return on the preferred, assuming a 70% dividend exc..
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