User Account

All Pages

Extend credit to a group of new customers

Assignment Help Finance Basics
Reference no: EM132232729

Firm Z is evaluating a proposal to extend credit to a group of new customers. The new customers will generate an average of $90,000 per day in new sales. On average, they will pay in 30 days. The variable cost ratio (i.e., COGS) is 80% of sales, collection expenses are 5% of sales, and the discount rate is 8%. Assume that the variable cost occur upfront while collection cost occur on the date in which the customer's payment is received. What is the NPV of one day's sales if Firm C grants credit.Assume there is no bad debt loss.

Reference no: EM132232729

Questions Cloud

What is the expected value of this stock five years from now : The required return is 12.7 percent and the growth rate is 6 percent. What is the expected value of this stock five years from now?
What is the stock expected price 5 : The required rate of return on the stock is 12%. What is the stock's expected price 5 years from today (i.e. solve for P5)?
What is its current stock price : The dividend growth rate is expected to be constant at 29% for 2 years, after which dividends are expected to grow at a rate of 6% forever.
What is the stock current price : The required rate of return is rs = 12.5%, and the expected constant growth rate is g = 6.9%. What is the stock's current price?
Extend credit to a group of new customers : Firm Z is evaluating a proposal to extend credit to a group of new customers. The new customers will generate an average of $90,000 per day in new sales.
Percentto evaluate average-risk projects : Gateway uses a cost of capital of 12 percentto evaluate average-risk projects, and it adds or subtracts 2 percentage points to evaluate projects of more or less
Stock of general medical corporation : Assume that $10,000 was invested in the stock of General Medical Corporation with the intention of selling after one year.
What will be the total annual cost of inventory : Holding costs are estimated at $1.25 per ton of bauxite. If Torque uses an inventory quantity of 3000 tons, what will be the total annual cost of inventory?
Development automatically create shareholder value : Please briefly explain the role of R&D within a corporation. Does more research and development automatically create shareholder value?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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