User Account

All Pages

Assignment, Corporate Finance

Assignment Help:
5. Produce a cash budget and determine the statement of external financing required for NSP Inc. for the months of December and January using the following information:
• NSP Inc. had sales in prior months as follows: August $150M, September $250M, October $300M, November $200M
o Due to the Holiday shopping season, it is anticipated that sales in December will increase by 100% month-over-month and in January they will decline by 75% month-over-month.
• The firm has two main types of customers:
o Retail customers are offered 30 day terms. They typically pay as follows: 25% pay in cash, 50% pay in one month, 15% pay in two months, 7% pay in three months, and the remainder is written off as bad debt.
o Commercial customers are offered 90 day terms. They typically pay as follows: 5% in cash, 5% in one month, 5% in two months, 70% in three months, 14% in four months, and the remainder is written off as bad debt.
o On average, the firm’s sales are made up of 35% retail customers and 65% commercial customers.
• The firm owns shares in ABC Inc. and bonds of XYZ Inc. The shares will pay a dividend of $50M in January and the bonds will make an interest payment of $20M in December.
• The firm’s COGS is 80% of sales. Suppliers typically offer the firm 30 day terms, and the firm typically pays as follows: 10% in cash, 85% in one month, and the remainder in two months.
• The firm’s fixed expenses, excluding salaries, are $20M a month.
• Salaries are largely variable, with gross salaries equaling 2% of monthly sales plus a fixed component of $1M. Salaries are paid a month in arrears (that is, with a month’s delay).
• The firm has debt outstanding. The debt has a total face value of $100M and is currently priced at $955 per bond. The debt has quarterly interest payments, a coupon rate of 8% and a yield to maturity of 6%. The next interest payment is due in January.

• The firm also plans to issue new shares in December. The shares are currently trading at $25M in the marketplace and the firm has 15M shares currently outstanding. They will increase the number of shares outstanding by 10% with the December issuance.
• The firm currently has a cash balance of $50M. It wishes to increase this balance to $75M in December and to maintain this as a minimum cash cushion in the future. If the firm has cash in excess of this amount, it will use it to pay down its line of credit.
6. Pavilion Inc. uses 20,000 units of inventory per year. Each order of inventory costs the firm $250 and the carrying cost associated with the inventory is $1.25 per unit.
i. What is the total inventory cost if the firm only purchases inventory once per year? [3 points]
ii. What is the total inventory cost if the firm purchases inventory every week? [3 points]
iii. What is the economic order quantity? [5 points]

7. You are considering purchasing a new computer for $2,000. You have done some research and have found four potential stores to purchase your computer from. Each offers you different payment terms, as outlined below. Where discount offers you the lowest effective annual interest rate?
i. Futureshop: 1.5/10 net 20 [3 points]
ii. Staples: 2/15 net 20 [3 points]
iii. Costco: 1.5/10 net 30 [3 points]
iv. Walmart: 2.5/5 net 45 [3 points]

Related Discussions:- Assignment

M&A, How would you evaluate a proposed merger?

How would you evaluate a proposed merger?

Cost of capital, How does cost of capital vary with debt-to-value ratio?

How does cost of capital vary with debt-to-value ratio?

Finance, Source of short term finance

Source of short term finance

Compute the expected return, You have ten million dollars to allocate acros...

You have ten million dollars to allocate across two projects, code named 'Wombat' and 'Marmot.' Both projects are somewhat scalable, in that you could potentially invest as much (u

Endowment, #quOn Completion of her introductory finance course, Kieran was ...

#quOn Completion of her introductory finance course, Kieran was so pleased with the amount of useful and interesting knowledge she gained that she convinced her parents, who were w

Stock index options, Explain with proof that c >= max(S - X, 0), where c is...

Explain with proof that c >= max(S - X, 0), where c is the value of the European call option, S is the price of the underlying asset and X is the strike of the option. The follo

Assignments, I need to know about corporate financial analysis

I need to know about corporate financial analysis

Find weighted average cost of capital - yield to maturity, Monsanto Company...

Monsanto Company has 3 million shares, selling at $25 each. The company has just paid a dividend of $1.35 and the next year's dividend is expected to be $1.50, which is in line wit

Calculate the net present value of the proposed venture, MOUNTAIN BLEND SPE...

MOUNTAIN BLEND SPECIALITY COFFEE CO Mountain Blend Speciality Coffee Co, a listed company, is the largest coffee wholesaler and roaster in Carvania. At present it is solely invo

Cash budget, You have been asked to prepare a cash budget for Whitborrow pl...

You have been asked to prepare a cash budget for Whitborrow plc for the next three months, October, November and December. The Managers are concerned that they may not have suffici

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

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: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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