Reference no: EM13915011
Lockbox system
Hardin-Gehr Corporation (HGC) began operations 5 years ago as a small firm serving customers in the Detroit area. However, its reputation and market area grew quickly. Today HGC has customers all over the United States. Despite its broad customer base, HGC has maintained its headquarters in Detroit; and it keeps its central billing system there. On average, it takes 5 days from the time customers mail in payments until HGC can receive, process, and deposit them. HGC would like to set up a lockbox collection system, which it estimates would reduce the time lag from customer mailing to deposit by 3 days-bringing it down to 2 days. HGC receives an average of $1,300,000 in payments per day.
How much free cash would HGC generate if it implemented the lockbox system? Round your answer to the nearest cent.
$
Would this be a one-time cash flow or a recurring one, assuming the company ceases to grow?
I. one time cash grow.
II. recurring cash flow
How would growth affect your answer?
If the firm grows, cash flow
I. Would be a one time cash flow
II. Would Increase by differential growth
III. Would decrease by differential growth
If HGC has an opportunity cost of 10%, how much is the lockbox system worth on an annual basis? Round your answer to the nearest cent.
$
What is the maximum monthly charge HGC should pay for the lockbox system? Round your answer to the nearest cent.
$
|
Firms weighted average cost of capital
: Klausenheimer has earnings before interest and taxes of $1,500,000. The book and the market value of debt is $1.7million. The unlevered cost of equity is 15.5 percent while the pre-tax cost of debt is 8.6 percent. The tax rate is 38 percent. What is ..
|
|
Interpret volume variance
: Calculate and interpret volume variance
|
|
What amount of unearned revenue would ditto report
: Ditto received a $90,000 cash advance on March 1, 2013, for legal services to be performed in the future. Services were to be provided for a one-year term beginning March 1, 2013.
|
|
Find the equation of the tangent line at the indicated point
: Find the equation of the tangent line at the indicated point- f(x) = sin(x)sec(x) at x = π.
|
|
How much is the lockbox system worth on annual basis
: Hardin-Gehr Corporation (HGC) began operations 5 years ago as a small firm serving customers in the Detroit area. However, its reputation and market area grew quickly. Would this be a one-time cash flow or a recurring one, assuming the company ceases..
|
|
Contract for construction
: Entered into a contract for construction of a new building, payment to be made within 30 days following completion.
|
|
Received cash for services to be performed
: Identifying transaction type, its effect on the accounting equation, and whether the effect is recorded with a debit or credit
|
|
Capital markets and investment banking process paper
: Investment banks provide an abundance of crucial services to the economy. The first important role of investment bank is to assist public and private corporations in raising funds for the capital markets. A second service is to provide strategic a..
|
|
Net increase in cash for the year
: a $16,200 increase in accounts payable, a $13,300 decrease in wages payable, a $79,400 increase in equipment, and a $106,000 decrease in notes payable. Calculate the net increase in cash for the year.
|