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First picked fruits is considering two alternatives to stimulate sales. currently, the policy is to net 30 and the average collection period is 40 day, with bad debt losses of 1.25% of sales. all sales are credit sales and are expected to be $6.1 million annually under this period. They are considering two new policies, under policy 1 credit terms would be lengthened to 45 days to a select group of customers with an expected increase in sales to $6.9 million annually. However, it is expected that the incremental sales would experience bad debt losses of 1.75% and that the average collection period or bad debt loss experience on the existing credit sales. under policy 2 credit terms would be lengthened to60 days to a select group of customers not completely overlapping with the first group) sales would be expected to rise to $7.2 million annually. incremental sales expectations would be payment on average collection period or bad debt losses on the original credit sales. first picked fruits has an opportunity cost of funds of 16% and its variable costs are 94% of sales. a) is either alternative advantageous? b) any concerns with the analysis as stated? c) any theoretical concern with an apparent on year time horizon for analysis?
Calculate the point estimate of the accounts audited value. Calculate the projected misstatement for the population.
There are many users of accounting information, such as business owners, stockholders, customers, lenders, and suppliers. Among the financial statements is the statement of financial position. Answer the following questions about the statement of fin..
If an HMO covered 150,000 lives, expected 25 myocardial infarctions (MIs) to occur each year within the covered lives, would expect a length of stay of 4.5 days for each MI, and had to pay an average of $950 per day for each day the MI patient was in..
Debt: 3,500 6 percent coupon bonds outstanding, $1,000 par value, 22 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. Common stock: 87,500 shares outstanding, selling for $59 per share; the beta is 1.15. Preferre..
Bernie Madeoff pays $250,000 for a new four-door bedroom 2,400-square-foot home outside Tonopah, Nevada. He plans to make a 20% down payment, but is having trouble deciding whether he wants a 15-year fixed rate (6.398%) or a 30-year fixed rate (6.879..
Use the following information to calculate the dollar cost of using a money market hedge to hedge 200,000 pounds of payables due in 180 days.
XYZ’s stock currently sells for $100. Over the 3 months, the stock price will either increase by 10% or decrease by 10%. The 3 month T-Bill rate is 5.0% (annual rate). Suppose that the 3 month option price of XYZ is at 105. What will be the desired c..
Goodwill is an accounting entry equal to the difference between purchase price and the net asset value of the acquired assets. As a business manager, what do you believe goodwill represents? How could the factors that goodwill represents actually con..
In considering investments with different degrees of risk, what two factors will influence an investor's decision? What is an appropriate investment for an individual who needs funds in a short period of time for necessities?
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 15 percent a year for the next 4 years and then decreasing the growth rate to 5 percent per year. The company just paid its..
Davita Spencer is a manager at Half Dome Asset Management. She can generate an alpha of 2% a year up to $100 million. After that her skills are spread too thin, so she cannot add value, and her alpha is zero. What alpha do investors in Davita’s fund..
What is the average daily collection float? What is the weighted average delay? calculate the daily cost of the float.
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