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

Net Working Capital, #questionSelecting Kanton Company''s Financing Strateg...

#questionSelecting Kanton Company''s Financing Strategy and Unsecured Short-Term Borrowing Arrangement. Morton Mercado, the CFO of Kanton Company, carefully developed the estimate

Main types of estimating methodology, (a) Accurate estimation is crucial f...

(a) Accurate estimation is crucial for effective planning and control and is related with time, information, experience of estimator, techniques used and funding. Discuss the thre

Stock market, Who regulates the stock market and the reason for the need fo...

Who regulates the stock market and the reason for the need for such standard and heavy regulations

Asda, asda

asda

Bonds, you buy a car for ths 10000000 to be repaid in 3 years, with annua i...

you buy a car for ths 10000000 to be repaid in 3 years, with annua interest of 12%. preapare a loan amortization table

Interest rate parity, Explain what caused "the long boom" in the U.S. and w...

Explain what caused "the long boom" in the U.S. and world economy from the early 1980s to its peak in 2006.  Make sure to mention, with a few key facts in each case, the role playe

Calculate the firm''s corporate cost, Morningside nursing Home, a not-for-p...

Morningside nursing Home, a not-for-profit corporation, is estimating its corporate cost of capital.  Its tax-exempt debt currently requires an interest rate of 6.2 perce

Purchase the machine outlaright, calculate pv

calculate pv

Report on the budgeted versus actual outcomes, You are required to provide ...

You are required to provide a report of approx 500 words or less (excluding attachments and references), accompanied by relevant calculations, in MS Word, MS Excel and/or PDF forma

Differentiate between interest and currency swaps, Question: a) Differ...

Question: a) Differentiate between interest and currency swaps. b) You are the corporate treasurer of Quinnie International Inc. Your firm, rated as AAA, is able to raise

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