About the operations of hancock company

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Reference no: EM131056859

The following information about the operations of Hancock Company is available.

Annual sales $185 million

Cost of goods sold $125 million

Average accounts receivable $25 million

Average accounts payable $15 million

Average inventory $30 million

Cost of capital 12%

A) Find the NPV of its operating cycle.

(B) What is the new NPV if Hancock can delay the payments by 2 days and make the collections 2 days earlier? By comparing the answers to (A) and (B), can you tell if the company made the right move?

Reference no: EM131056859

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