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Lewis Enterprises is considering relaxing its credit standards to increase its currently sagging sales. As a result of the proposed relaxation, sales are expected to increase by 10% from 10,000 to 11,000 units during the coming year; the average collection period is expected to increase from 45 to 60 days; and bad debts are expected to increase from 1% to 3% of sales. The sale price per unit is $40, and the variable cost per unit is $31. The firm's required return on equal-risk investments is 25%.
Evaluate the proposed relaxation, and make a recommendation to the firm.
An investment offers to quadruple your money in 24 months (don't believe it). What rate per three months are you being offered?
Steve Smith, owner of Steve's Bowling Alley, generated $30,000 in sales for the month of January. "Regular" customers are allowed to play on account.
Estimate the vulnerability of each company to external forces such as a recession, higher interest rates, & global competition.
a proposed cost-saving device has an installed cost of 730000. the device will be used in a five-year project but is
What is the "interest rate," and how is it determined?
What your be the yield on this strategy if there was an immediate decrease in interest rates by 100 basis points over the entire yield curve after you purchased the 6 month security.
wilder corporation is considering granting credit to currently limited customers or no-credit customers. the following
Stockholders require a return of 14% to invest in Baybor's common stock. Compute the value of Bayboro's common stock today.
Juan, a friend of yours, just inherited some amount from his great-aunt & is trying to decide how to invest it. He has come up with some firms that he's interested in & has been doing a little research online.
Aubey Corporation is planning two projects that have the following cash flows, At what cost of capital would the two projects have the same net present value?
You should recommend that the project be rejected because, although its NPV is positive, it has an IRR that is less than the WACC.
Fama's Llamas has a WACC of 10.30 percent. The company's cost of equity is 13.2 percent, and its cost of debt is 8.9 percent. The tax rate is 40 percent.
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