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Induss Inc. is considering obtaining funding through advances against receivables. Total annual credit sales are $600,000.00, terms are net 30 days, and payment is made on an average of 30 days. A local bank will advance funds under a pledging arrangement for 13 percent annual interest. On average, 75 percent of credit sales will be accepted as collateral. Ikhlas Finance offers factoring on a nonrecourse basis for a 1 percent factoring commission, charging 1.5 percent per month on advances and requiring a 15 percent factor's reserve. Under this plan, the firm would factor all accounts and close its credit and collections department, saving $10,000.00 per year.
(i) Calculate the effective interest rate and the average amount of funds available under pledging and under factoring.
(ii) What considerations other than cost should a firm account for in determining whether to enter the factoring agreement?
Calculate the standard deviation of expected return of the portfolio in the last question.
The manager of a $35 million portfolio of domestic stocks with a beta of 1.20 would like to diversify internationally.
Rachel is a financial investor who actively buys and sells in the securities market. Now she has a portfolio of all blue chips, including: $13,500 of
You will use the information from all your credit cards. If you do not have credit cards, go online and find the information of at least 3 major credit cards.
Over the past 6 months, you observe the following monthly returns for an actively managed small cap mutual fund and for the benchmark small cap index.
Please write a memo to the CEO making the case why this should be the first and arguably the most important question that is asked, and present a plan to train all of your loan officers on getting this information.
If the company is paying a dividend of $2.50/share and tomorrow the stock will go ex-dividend. Calculate the ex-dividend price tomorrow morning.
What is the required return of the stock? Enter you answer as a percentage. To two decimal places
You purchase a bond with an invoice price of $1,030. The bond has a coupon rate of 7.8 percent, and there are four months to the next semiannual coupon date.
What keeps other companies from having the commitment to environmental sustainability that NBB has evidenced?
Explain how you would find the value of this annuity at different points in time between today and 19 years from now.
Income statement: Pearson Brothers recentlyreported an EBITDA of $7.5 million and net income of $1.8million. It had $2.0 million of interest expense, and itscorporate tax rate was 40%. What was its charge fordepreciation and amortization?
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