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1. Quantitative Problem: Winston Inc. is trying to determine the effect of its inventory turnover ratio and days sales outstanding on its cash conversion cycle. Winston's 2013 sales (all on credit) were $188,000 and its cost of goods sold was 75% of sales. It turned over its inventory 8.89 times during the year. Its receivables balance at the end of the year was $13,108.85 and its payables balance at the end of the year was $7,405.73. Using this information calculate the firm's cash conversion cycle. Round your answer to the nearest whole. Round the days amounts in your intermediate calculations to the nearest whole day. Do not round other intermediate calculations.
2. Quantitative Problem: Adams Manufacturing Inc. buys $8.5 million of materials (net of discounts) on terms of 2/10, net 50; and it currently pays after 10 days and takes the discounts. Adams plans to expand, which will require additional financing. If Adams decides to forgo discounts, how much additional credit could it obtain? Round your answer to the nearest cent. Do not round your intermediate calculations. Use 365 day in a year.
What would be the nominal and effective cost of such a credit? Round your answer to 2 decimal places. Do not round intermediate calculations. Use 365 day in a year.
Nominal cost:
Effective cost:
If the company could receive the funds from a bank at a rate of 8.8%, interest paid monthly, based on a 365-day year, what would be the effective cost of the bank loan? Round your answer to 2 decimal places. Do not round intermediate calculations.
Assume the discount rate or weighted average cost of capital is 10%.
The following data apply to Neuman Corporation's convertible bonds: Maturity: 10 Stock price: $30.00 Par value: $1,000.00 Conversion price: $35.00 Annual coupon: 5.00% Straight-debt yield: 8.00% What is the bond’s conversion ratio? What is the bond’s..
Demski Company pays its employees on the 1st and 15th of each month. It is March 31 and Demski is preparing financial statements for this quarter.
If interest rates suddenly rise by 3 percent, what is the percentage price change of these bonds?
Your portfolio is 200 shares of Barden, Inc. The stock currently sells for $90 per share. The company has announced a dividend of $2.10 per share with an ex-dividend date of April 19. Assuming no taxes, how much will your stock be worth on April 19? ..
Describe how risk is associated with opportunity cost. Explain why book values should not be used to evaluate costs of capital.
What is the dividend rate on a stock whose six-month call option and six-month put option premiums are equal,
Which of the following is NOT a relevant cash flow and thus should not be reflected in the analysis of a capital budgeting project? Changes in net working capital. Shipping and installation costs.
A F/IF security is created with $20,000,000 in principal and a WAC of 7%. 40% of the principal is allocated to the floater class and the remainder is allocated to the inverse floater class. The floater class will receive LIBOR+50bp. What is the cash ..
A tax-exempt bond was recently issued at an annual 12 percent coupon rate and matures twenty years from today. The par value of the bond is $1,000. If required market rates are 12 percent, what is the market price of the bond? If required market rate..
Russell Container Corporation has a $1,000 par value bond outstanding with 20 years to maturity. The bond carries an annual interest payment of $126 and is currently selling for $980 per bond. Russell Corp. is in a 30 percent tax bracket. Make the ap..
We are evaluating a project that costs $650,000, has a five-year life, and has no salvage value. Calculate the best-case and worst-case NPV figures.
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