Determine the cost to amy

Assignment Help Finance Basics
Reference no: EM132497947

Scott's sister, Amy, owns a very large pet supply business in Wisconsin. Last year she sold $30,000,000 worth of product to her wholesalers "net 30". Scott recently reviewed the financials of her company and determined that their average collection period is 48 days. Amy was not happy with this number, as her cash flow is becoming tight and difficult to deal with due to customers taking too long to pay. Scott mentioned that she should consider offering a cash discount for those customers who pay much more quickly--perhaps a 2% cash discount for those who pay in full within ten days. After some consideration, Amy decided to move forward with it; expecting that roughly 50% of her customers will take advantage of the discount. If all goes well, the average collection period should decline by 18 days. The opportunity cost on the receivables investment is 16%. Determine the cost to Amy.

Reference no: EM132497947

Questions Cloud

What is sofia net investment on new purchase : She anticipates that it will reduce her operating costs by $6,600 a year. What is Sofia's net investment on this new purchase?
FINA6000 Managing Finance Assignment : FINA6000 Managing Finance Assignment Help and Solution - Case Analysis, Laureate International Universities, Australia. Analyse risk and return
What entry should be made in may : Cash disbursements and obligations for warranty service on washing machines during May totaled $81,000. What entry(ies) should be made in May?
What is the ebit or eps indifference point : Construct the bottom half of the income statement (including EPS) for each financing alternative when EBIT is at $6,000,000. What is the EBIT/EPS indifference
Determine the cost to amy : The opportunity cost on the receivables investment is 16%. Determine the cost to Amy.
How post while preparing budget analysis : Depreciation is $30,000 for October and $36,000 for November and December due to the purchase in November. How post while preparing Budget analysis
Make journal entry to record each of preceding transaction : Prepare journal entries to record each of the preceding transactions. Assume a perpetual inventory system. Evenflow had the following transactions for October
What is the firm cash flow per share ratio : Serenade Corp.'s cash flow last year was $1,112.27 million. The company has 117.73 million shares outstanding. What is the firm's cash flow per share ratio?
Prepare journal entries resulting from bank reconciliation : Prepare the journal entries resulting from the bank reconciliation. The company recorded a $1,764 cheque in payment of an account payable incorrectly

Reviews

Write a Review

Finance Basics Questions & Answers

  A companys cost of capital is a weighted average of the

a companys cost of capital is a weighted average of the returns demanded by debt and equity investors. the weighted

  What is the promised payment on the bond

A firm will be worth (next year) either $50, $100, or $150, with probabilities 1/3, 1/3, and 1/3, respectively. Assume that this type of firm has an overall.

  Possibility of operating a small business

Imagine you are considering the possibility of operating a small business or practice related to health care, either as a provider of some sort of care or as a service intended to support various provider organizations in their care-delivery activ..

  Write a review of the article

Write a review of the article . Explain the key points that the author is trying to communicate. b The review should be at least two pages not counting the title or reference pages.

  What is the reorder level for a 98% cycleservice level

What reorder level should the company use for an item that has a Normally distributed demand with mean of 1,000 units a week and standard deviation of 100 units? What is the reorder level for a 98% cycleservice level?

  How much must you deposit today into a savings account in

how much must you deposit today into a savings account in order to be able to withdrawl 54000 from the account in 5

  What is the ebit

The revenue is $30,000, the cost of goods sold is $16,000, the selling, general and administrative expenses are $7,000, interest expense is $2,000

  What is the balance in the account after 4 years

What is the balance in the account after 4 years? How much of this balance corresponds to? "interest on? interest"?

  What is the required return of the portfolio

You hold the positions in the table below. What is the beta of your portfolio? If you expect the market to earn 12 percent and the risk-free rate is 3.5 percent, what is the required return of the portfolio? (LG3)

  Financing international trade

module is financing international trade. One factor to consider here is the working capital guarantee program. That is, how is this program administered by outside agencies

  What is the rate of return required to accumulate

What is the rate of return required to accumulate $400,000 if you invest $10,000 per year for 20 years. Assume all payments are made at the end of the period.

  How much will you have left to spend next year

As a newly-minted MBA embarking on a career in investment banking, you must own a new car immediately. The car costs $28,320. You also have to spend $3,248.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd