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By dividing the southern region, collections will be accelerated by ½ day. The rate of return is 17 percent. Should the southern region be divided?
Sales for Petro Equipment are expected to be 5,800 units for the coming month. The company keeps a 25% of unit sales for each month in ending inventory.
Marcel Co. is growing quickly. Dividends are expected to grow at a 30 percent rate for the next three years, with a growth rate falling off to a constant 6 percent thereafter.
As a result of the system, the float time will be reduced by 3 days. The rate of return is 14 percent. Should the lockbox arrangement be instituted?
Accounts are paid on average 60 days after sale. Sales per month average $25,000. What is the investment in accounts receivable?
Explain why sunk costs should not be included in a capital budgeting analysis, but opportunity cots and externalities should be included. Give an example of each.
It anticipates that 30 percent of its customers will take advantage of the discount. The collection period is expected to decrease to 2 months. Should the discount policy be implemented?
Explain why net operating working capital is included in a capital budgeting analysis and how it is recovered at the end of a project's life.
The gross profit rate is 30 percent and the rate of return is 16 percent. Sales discounts are given on cash sales. Should the sales campaign be initiated?
Calculate reorder level, minimum stock level, maximum stock level and average stock level from the following information:
Gross profit approximates 12 percent of sales. The rate of return is 18 percent. Should credit be extended to categories B and C?
Materials Cost. Grason Corporation purchases 3,000 units of a raw material at a list price of $5 each. The supplier offers a quantity discount of 4 percent. What is the material cost of the item?
Average Investment in Inventory. West Corporation orders 4,000 units of a product at the beginning of the period for $7 each. What is West Corporation's average investment in inventory?
Calculate the probability of default for each of the five tranches. How does the likelihood of a tranche defaulting compare with the risk of the underlying mortgages?
What does G" > 0 imply about the nature of arbitrage? Explain. If G" is larger are arbitragers more likely to succeed or more likely to fail in offsetting noise traders signals in period 2?
The company uses straight-line method to calculate its depreciation. The tax rate is assumed to be 40 percent. Determine the tax shield of the purchase.
A company's fixed operating costs are $480,000, its variable costs are $3.85 per unit, and the product's sales price is $4.30. What is the company's breakeven point; that is, at what unit sales vol
Find the present value of all future dividends beginning with the fifth year's dividend. The present value you find will be at the end of the fourth year. Use the formula P4 = D5/(r - g).
Joker stock has a sustainable growth rate of 8 percent, ROE of 18 percent, and dividends per share of $3.35. If the P/E ratio is 18.7, what is the value of a share of stock?
Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $94, $312, and $90, respectively. If Baker undergoes a 2-for-1 stock split, what is the new divisor for the price
If you buy the note, you will receive 10 annual payments of $2,000, the first payment to be made immediately. What rate of return, or yield, does the note offer?
Explain the process of cross-hedging. What are indicators of effective cross hedging?
The dividend is expected to grow 30 percent per year for the next 2 years and at 8 percent per year thereafter. At what price should the stock sell?
As stated in the audit report, or Report of Independent Accountants, the primary responsibility for a company's financial statements lies with
Rather than pay you $1,000 a month for the next 20 years, the person who injured you in an automobile accident is willing to pay a single amount now to settle your claim for injuries. Would you rath