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Home Depot expects sales of $20 million this year under the current credit policy. The present credit terms is net 30 but the DSO is actually 45 days, and the bad debt loss is 3% of sales. Also, Home Depot's cost of capital is 10%, and its total variable costs is running at 70% of sales. Since Home Depot wants to improve its profitability, the Finance Manager is proposing to change the credit term to 2/15, net 30. The Finance Manager predicts that sales would increase by 10% as a result and that 75% of all customers would take advantage of the new discount with the rest paying on time. The bad debt loss would fall to 1%. Should the Finance Manager's proposal be accepted? How much would the pre-tax profits change before and after this proposal?
You must show all calculation steps, providing a final answer only will not get you full marks.
It needs to be around 300 to 325 words. Its for a graduate level MBA course. Would you require a new development office staff member to become a member of Association of Fundraising Professionals (AFP)? Why, or why not? Would you pay them a 10% co..
Credit Limit. Refer to question 8. What will Mary and Marty's credit limit be if the bank uses the market value of equity to determine their credit limit and will loan them 70% of the equity?
1. if you bought a 1000 face value cd that matured in nine months and which was advertised as paying 9 annual interest
What entity determines the amount of securities needed in a securitization?
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Chatham Clinic has accumulated the following information regarding its patient visits: Static budget: Patient visits: 1,500 Variable cost per visit: $50 Fixed costs: $100,000 Actual results: Patient visits: 1,600 Variable cost per visit: $55 Fixed..
Discuss the conditions under which the capital expenditure of a foreign subsidiary might have a positive NPV in total currency terms but be unprofitable from the parent firm's perspective.
an investor recently purchased a corporate bond which yields 9 percent. the investor is in the 36 percent tax bracket.
Discuss what changes might take place in your personal net worth during different stages of your life. How might these changes affect your credit capacity? Mention at least three different stages of life.
If she plans on paying the loan off in 7 years after the 3 years spent in college how much should her monthly payment be?
firms often involve themselves in projects that do not result directly in profits. do these projects contradict the
Write a summary of the article Who Manages Risk and an Empirical Examination of Risk Management Practices in the Gold Mining Industry"
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