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For the year just ended, WestPoint Ltd. had $500,000 in credit sales monthly with an average maturity of receivables of 45 days. WestPoint Ltd uses a factor to obtain funds 15 days after the sales. This means the factor is advancing funds for 30days. The factor charges 10.5 percentage interest (APR), 2.5 percentage over the current prime rate of 8 percentage. In addition, the factor charges 1.5 percentage fee for processing the receivables and assuming all credit risk. If WestPoint ran its own credit department, it would cost $2,000 per month in variable expenses and this saved with factoring. What is the effective cost of borrowing?
There are 19 million shares outstanding. What is the value of the stock price today (Year 0)?
What is the cross-rate in terms of yen per pound? Suppose the cross-rate is ¥137 = £1. What is the arbitrage profit per dollar?
If you want to invest in a mutual fund, you have a choice between open-end and closed-end funds. Which would you prefer and why? Make sure to explain the differences between the two as part of your answer.
Evil Pop, Inc., has an average collection period of 37 days. Its average daily investment in receivables is $89,600. Assume 365 days per year. What is the receivables turnover? What are annual credit sales?
Kellogg Co. (K) recently earned a profit of $2.52 earnings per share and has a P/E ratio of 19.50. The dividend has been growing at a 9 percent rate over the past few years. If this growth rate continues, what would be the stock price in five years i..
The World Income Appreciation Fund has current assets with a market value of $4.8 billion and has 130 million shares outstanding. What is the net asset value (NAV) for this mutual fund? The World Income Appreciation Fund has current assets with a mar..
KADS, Inc., has spent $340,000 on research to develop a new computer game. The firm is planning to spend $140,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $44..
As the degree of sensitivity of a project to a single variable rises, the:
Suppose an investor is interested in purchasing the following income producing property at a current market price of $450,000.
A manager is holding a $1.6 million stock portfolio with a beta of 1.1. She would like to hedge the risk of the portfolio using the S&P 500 stock index futures contract. How many dollars worth of the index should she sell in the futures market to min..
Cake is a product of the Chester Company. Chester's sales forecast for Cake is 1,215 in the Americas region. Chester wants to have an extra 10% on hand above their forecasted units in case sales are better than expected. Taking current inventory into..
Use the Black Scholes’s model to estimate the premium involved to trade these options. Did he pay or receive this premium?
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