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J-Mart, a nationwide department store chain, processes all its credit sales payments at its suburban Detroit headquarters. The firm is considering the implementation of a lockbox collection system with an Atlanta bank to process monthly payments from its southeastern region. Annual credit sales collections from the region are $60 million. The establishment of the lockbox system would reduce mailing, processing, and check clearing time from 8 days currently to 3.5 days, reduce company processing costs by $25,000 per year, and reduce the compensating balance of its Detroit bank by $200,000. The Atlanta bank would not charge any fee for the lockbox service but would require J-Mart to maintain a $500,000 compensating balance. Funds released by the lockbox arrangement could be invested elsewhere in the firm to earn 15 percent before taxes. Determine the following:
a. The amount of funds released by the lockbox arrangement
b. The annual (pretax) earnings on the released funds
c. The annual net (pretax) benefits to J-Mart of establishing the lockbox system with the Atlanta bank
The controlling shareholder of Dragon Semicon based in Taiwan. Dragon Semicon has strong growth potential. In order to fund future growth, you are considering listing the company stock either on the New York or the London stock exchange. Visit the..
What is the yield to maturity on these bonds if it pay coupon annually?
unfortunately in recent times we have seen a number of examples of unethical behavior in organizations often tied to
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To prepare for this Discussion, consider your organization or one with which you are familiar, and its current riskiness. Develop an idea for a new product or service that has the potential to generate a good return on investment at reasonable or eve..
Use the appropriate compound interest formula to compare the balance in the account after the stated period of time.
Calculate the current ratio based on the following information: cash = $14,870; accounts receivable = $22,108; prepaid $3,010; supplies = $927; equipment = $62,150; accumulated depreciation = $13,750; accounts payable = 28,000. Round to two decimal p..
gamma medicals stock trades at 115 a share. the company is contemplating a 3-for-2 stock split. assuming that the stock
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Explain the meaning of the terms "residual payout policy" and "managed payout policy". Does the empirical evidence suggest that U.S. and European companies follow a residual or a managed payout policy?
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