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Problem
Norma's Cat Food of Shell Knob ships cat food throughout the country. Norma has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by two and one-half days. Furthermore, the cash management department of her bank has indicated to her that she can defer her payments on her accounts by one-half day without affecting suppliers. The bank has a remote disbursement center in Iowa.
1. If the company has $5 million per day in collections and $3 million per day in disbursements, how many dollars will the cash management system free up? Justify your answers.
2. If the company can earn 8 percent per annum on freed-up funds, how much will the income be? Justify your answers.
3. If the annual cost of the new system is $800,000, should it be implemented? Explain why or why not.
Suppose an 8% coupon, 30 year bond but this bond is callable in 10 years at a call price of $1,100. What is the Yield to Call? What is the relation between the interest rate and the price of this callable bond?
To expand his portfolio Austin recently purchased 400 shares of common stock in the rail car manufacturing company and Manufacturing firm in Nevada.
Operating expenses in the Budgeting Basics and Beyond e-book. What are your major takeaways from this chapter? Will you approach budgeting for expenses differently as a result?
A US investor sees an arbitrage opportunity in the currency markets. The spot exchange rate between the Swiss Franc and US Dollar is 1.00549 ($ per CHF). Assume the continuously compounded interest rates in the US and Switzerland are 0.33% and -0.81%..
A company that is using the internal rate of return (IRR) to evaluate projects should accept a project if the IRR:
Briefly explain the differences between common stockand preferred stock? Why would someone buy preferredshares over common shares?
You have been hired to work as a consultant at the Coach Inc company. The company has announced a wide range of strategic initiatives. These strategies have been formulated and implemented. Your job is to design the control portion of the strategy, w..
Conch Republic Electronics is a midsized electronics manufacturer located in Key West, Florida. The company president is Shelly Couts, who inherited the company. The company originally repaired radios and other household appliances when it was found..
Use a decision tree to show how the bank can maximize their expected profits.
ABC, Inc. has a foreign subsidiary in a country that is prone to instability. takes its toll on ABC in the form of eroding shareholder wealth.
The Yurdone Corporation wants to set up a private cemetery business. According to the CFO, Barry M. Deep, business is "looking up." As a result, the cemetery project will provide a net cash inflow of $90,000 for the firm during the first year, and th..
Which of the following statements about listing on a stock exchange is most CORRECT? a. Any firm can be listed on the NYSE as long as it pays the listing fee. b. Listing provides a company with some "free" advertising, and it may enhance the firm's p..
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