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Drugs 'R Us operates a mail order pharmaceutical business on the West Coast. The firm receives an average of $325,000 in payments per day. On average, it takes four days for the firm to receive payment, from the time customers mail their checks to the time the firm receives and processes them. A lockbox system that consists of ten local depository banks and a concentration bank in San Francisco would cost $6,500 per month. Under this system, customers' checks would be received at the lockbox location one day after they are mailed, and the daily total would be wired to the concentration bank at a cost of $9.75 each. Assume that the firm can earn 10 percent on marketable securities and that there are 260 working days and hence 260 transfers from each of the ten lockbox locations per year.
a. What is the total annual cost of operating the lockbox system?b. What is the dollar benefit of the system to Drugs'R Us?c. Should the firm initiate the lockbox system?
Should Tangshan Mining company accept a new project if its maximum payback is 3.25 years and its initial after tax cost is $5,000,000 and it is expected to provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $70..
You own a portfolio that is 34 percent invested in Stock X, 22 percent in Stock Y, and 44 percent in Stock Z. The expected returns on these three stocks are 11 percent, 18 percent, and 14 percent, respectively. What is the expected return on the po..
During the twelve month period they owned the stock, Cisco Systems paid dividends that totaled $0.70. Calculate the Hernandez's total return for this investment.
Donna and Sherman Terrel are preparing a budget for 2010. Donna is a systems analyst with an airplane producer, and Sherman is working on a master's degree in educational psychology.
Brian responds that the sunken ship was abandoned and therefore he has good title to everything to which he took possession. What is the court likely to rule and why?
What is the reduction in outstanding cash balances as a result of implementing the lockbox system?
How much value has McLaughlin's management added to stockholder wealth over the years, i.e., what is McLaughlin's MVA? Round your answer to the nearest dollar, if necessary.
Alcoa recently announced a new dividend policy. The firm said it would pay a base cash dividend of 40 cents per common share each quarter. For what types of firms would Alcoa's new dividend policy be appropriate? Explain.
What is the purpose of computing a moving-average line for a stock? Describe a bullish pattern using a 50-day moving-average line and the stock volume of trading. Discuss why this pattern is considered bullish.
Do you think it is a good idea for a corporations to have liabilities (debt) when running their business? Explain your answer.
Which of the following is a different concept from the other three?
What is meant by an indexing portfolio strategy and what is the justification for this strategy? How might it differ from another passive portfolio?
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