Discuss annual rate of return on the marketable-securities

Assignment Help Finance Basics

Reference no: EM131488940

Question: (Marketable-securities portfolio) The Alex Daniel Shoe Manufacturing Company currently pays its employees on a weekly basis. The weekly wage bill is $500,000. This means that on average the firm has accrued wages payable of ($500,000 + $0)/2 = $250,000. Alex Daniel Jr. works as the firm's senior financial analyst and reports directly to his father, who owns all of the firm's common stock. Alex Daniel Jr. wants to move to a monthly wage-payment system. Employees would be paid at the end of every fourth week. The younger Daniel is fully aware that the labor union representing the company's workers will not permit the monthly payments system to take effect unless the workers are given some type of fringe benefit compensation. A plan has been worked out whereby the firm will make a contribution to the cost of life insurance coverage for each employee. This will cost the firm $35,000 annually. Alex Daniel Jr. expects the firm to earn 7 percent annually on its marketable-securities portfolio.

a. Based on the projected information, should Alex Daniel Shoe Manufacturing move to the monthly wage-payment system?

b. What annual rate of return on the marketable-securities portfolio would enable the firm to just break even on this proposal?

Reference no: EM131488940

Questions Cloud

The myths about small business entrepreneurs : Although a 2010 survey shows that almost 60% of youth between 15 and 25 years old indicated that they have a desire to be an entrepreneur

Write a research paper on feminism : Write a research paper on feminism, feminist theory, and womanism.

Data protection strictly limits how database information : The European Community's Directive on Data Protection strictly limits how database information is used and who has access to it.

What did each of the individuals contribute to the world : What did each of the individuals contribute to the world? Are there defining characteristics shared among all or most of the individuals?

Discuss annual rate of return on the marketable-securities : (Marketable-securities portfolio) The Alex Daniel Shoe Manufacturing Company currently pays its employees on a weekly basis. The weekly wage bill is $500,000.

Evaluate the truth and validity exercise : Evaluating the Truth and Validity Exercise. Evaluate each argument, using the four-step process described on pp. 197-198, regarding soundness of reasoning.

Describe the current events and how they are reflective : Analyze the events and apply the lecture and text to the news articles. What theories of stratification apply?

What is opportunity cost of maintain current banking setup : (Cash receipts acceleration system) Peggy Pierce Designs Inc. is a vertically integrated, national manufacturer and retailer of women's clothing.

Express the issue you found in your search : Express the issue you found in your search. Refine your expression and include both the original and the refined version. Justify your revision.

User Account

All Pages