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It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposit checks from customers. Cookie Cutter’s management is considering a lockbox system to reduce the firm’s collection times. It is expected that the lockbox system will reduce receipt and deposit times to three days total. Average daily collections are $121,000, and the required rate of return is 6 percent per year. Assume 365 days per year. What is the reduction in outstanding cash balances as a result of implementing the lockbox system? Cash balance reduction $ b. What is the daily dollar return that could be earned on these savings? (Round your answer to 2 decimal places. (e.g., 32.16)) Dollar return $ c-1 What is the maximum monthly charge Cookie Cutter should pay for this lockbox system if the payment is due at the end of the month? (Round your answer to 2 decimal places. (e.g., 32.16)) Maximum monthly charge $ c-2 What is the maximum monthly charge Cookie Cutter should pay for this lockbox system if the payment is due at the beginning of the month?
One-year T-bills currently earn 0.45 percent. You expect that one year from now, one-year T-bill rates will increase to 0.50 percent. If the unbiased expectations theory is correct, what should the current rate be on two-year Treasury securities?
What is this firm’s operating cash flow (using the traditional or direct method)?
The total book value of the firm’s equity is $20 million; book value per share is $40. The stock sells for a price of $30 per share, and the cost of equity is 12%. The firm’s bonds have a face value of $8 million and sell at a price of 115% of face v..
Which of the following will decrease days' sales outstanding
Estimate the futures price of the index for three-month and six-month contracts.
The maintenance expense on a machine is expected to be $5000 during the first year and to increase $600 each year for the following ten years. What present sum of money should be set aside now to pay for the required maintenance expense over the ten ..
What is the company’s contribution margin (CM) ratio?
The company has zero debt in its capital structure. Its overall cost of capital is 9%. The firm is considering a new capital structure with 50% debt. The interest rate on the debt would be 4%. Assuming that the corporate tax rate is 34%, what would b..
Kayla is considering investing in a bond with a face value of $12,000 with a coupon rate of 12% payable on a monthly basis. If she can get a 2.5% return per quarter on her money, what are the quarterly payments that she can receive from the bond?
Calculate the equity each of these people has in his or her home: Fred just bought a house for $200,000 by putting 10% as a down payment and borrowing the rest from the bank. Freda bought a house for $150,000 in cash, but if she were to sell it now, ..
Dave and Marlene Carter live in the Boston area, where Dave has a successful orthodontics practice. Dave and Marlene have built up a sizable investment portfolio and have always had a major potion of their investments in fixed-income securities. What..
Dinklage Corp. has 7 million shares of common stock outstanding. The current share price is $79, and the book value per share is $6. The company also has two bond issues outstanding. What are the company’s capital structure weights on a market value..
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