How much does the electronic firm generate in sales

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1. An electronics firm has only two assets: inventory of $155,000 and receivables of $75,000. The profit margin is 6.5 percent and on average it takes the firm 41.51 days to collect its receivables. For every dollar in assets, how much does the electronic firm generate in sales? Please show the calculation detail.

A. $8.79

B. $4.25

C. $2.87

D. $13.54

E. $3.06

2. We discussed three values of the firm: market value, accounting value, and intrinsic value. Explain how intrinsic value is associated with free cash flow.

3. A risk-free investment of $50,000 offers an annual return of 6%. A risky investment of $50,000 had a 40% probability of default, in which case it will pay only $25,000. What return must the risky investment promise?

Reference no: EM131890666

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