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P14-9 Relaxation of credit standardsLewis 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. (Note: Assume a 365-day year.)
P14-16 ETHICS PROBLEMControlled disbursing is defined as an information product?that is, the bank on which the company's checks are drawn provides an early-morning notification of the total dollar amount of checks that will clear the account that day. Based on that notification, the company may then fund the account for that amount by the close of business that afternoon. How might controlled disbursing still be viewed as a form of "remote disbursing," and therefore be considered unethical?
P15-9 Effective annual rateA financial institution made a $10,000, 1-year discount loan at 10% interest, requiring a compensating balance equal to 20% of the face value of the loan. Determine the effective annual rate associated with this loan. (Note: Assume that the firm currently maintains $0 on deposit in the financial institution.)
by using the proper PV Table and supposing a 12% annual interest rate, find out the present value on December 31, 2009 of the five period annual annuity of 10000 under each of following situations:
Determine the total income the company must get its sales to cover the Total Fixed Cost, Total Variable Costs and the expected gain.
Paul Bearer might elect to take lump-sum payment of $25,000 from his insurance policy or annuity of $3,200 annually as long as he lives. How long should Paul anticipate living for annuity to be preferable to lump sum if his opportunity rate is 8%?
Service sector using pricing decision and prepare a revenue budget on an accrual basis and including all sources of revenue discussed previously
What is the current strategic plan for DaimlerChrysler?
A company current balance sheet is as follows: calculate the firm's weighted-average cost of capital at various combinations of debt and equity, given the following data?
Today is Archie's 50th birthday and his retirement account totals $237,000. If he has the shortfall how much additional money should Archie save each year for next 12 years at 8% interest in order to have enough money to purchase an annuity that w..
Why does it make sense that the right to residual income and control go together? If theey are separated, how does this affect the value of a claim to residual income?
Brooke Bennett Marina has 300 available slips that rent for $900 per season. Payments should be made in full at the start of boating season, April 1, 2008. Make the appropriate journal entries for fiscal 2007.
Find out the present value of following future amounts? $800 to be received 10 years from now discounted back to the present at 10 percent
Finding out strength as well as weakness of organization using ratio analysis and what is causing this drop in net income
Describe the advantages of TMS's new decentralized IS structure. What are its disadvantages?
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