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Johnson Enterprises Inc. Is involved in the manufacture and sale of electronic components used in small AM/FM radios. The firm needs $300,000 to finance an anticipated expansion in receivables due to increased sales. Johnson's credit terms are net 60, and its average monthly credit sales are $200,000. In general, the firm's customers pay within the credit period; thus, the firm's average accounts receivable balance is $400,000. Chuck Idol, Johnson's comptroller, approached the firm's bank with a request for a loan for the $300,000 using the firm's accounts receivable as collateral. The bank offered to make a loan at a rate of 2 percent over prime plus a 1 percent processing charge on all receivables pledged.
Furthermore, the bank agreed to lend up to 75 percent of the face value of the receiv- ables pledged.Estimate the cost of the receivables loan to Johnson when the firm borrows the $300,000. The prime rate is currently 11 percent. b. Idol also requested a line of credit for $300,000 from the bank.The bank agreed to grant the necessary line of credit at a rate of 3 percent over prime and required a 15 percent com- pensating balance.Johnson currently maintains an average demand deposit of $80,000. Estimate thje cost of the line of credit to Johnson.Which source of credit should Johnson select? Why?
Which payment plan has the lowest risk of loss for the organization? Explain
meredith cleaners has the following balance sheet items.
Bailey,Inc.,buys 60 percent of the outstanding stock of Luebs,Inc.,in an acquisition that resulted in the recognition of goodwill. Luebs owns a piece of land that cost $200,000 but was worth $500,00 at the acquisition date. What value should be at..
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He also paid $14,000 in mortgage interest, $1,800 in property taxes, $300 of credit card interest, and $1400 in job hunting expenses when he tried to change jobs in March. Determine Daniel's income tax liability for 2009 before any allowable credi..
What was the amount of the projected benefit obligation at year-end? (Enter your answer in millions. Omit the "tiny_mce_markerquot; sign in your response.)
Variable expenses for Alpha Company are 40% of Sales. What are sales at the break-even point, assuming that fixed expenses total $150,000 per year:
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On the first day of the current fiscal year, $1,000,000 of 10-year, 7% bonds, with interest payable semiannualy were sold for $1,050,000. Present entries to record the following transactions for the current fiscal year:
we examined two very important topics in finance this week capital budgeting and dividend policy.critically reflect on
Policies regarding when a difference between actual and planned results should be investigated are generally more restrictive for non controllable items than for controllable items.
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