What is the 1-day change in value

Assignment Help Finance Basics
Reference no: EM132404394

J. James Book Publishers is trying to decide whether to offer a 3% cash discount for payments made within 10 days, making its new terms 3/10, net 30. On average, its paying customers currently pay in 40 days under its present terms of net 30. A sales analyst estimates that sales will stay the same. The existing bad-debt loss rate is 3%; the rate under the new policy will be the same. It is estimated that 40% of J. James paying customers will continue to pay in 40 days, on average. The company s annual cost of capital is 10%. Annual sales will remain unchanged at $250 million, and the variable cost ratio will continue to be 60%. The variable expenses for credit administration and collections will drop from 5% to 4% if the cash discount is implemented.

A. What is the 1-day change in value related to the proposed terms.

B. What is the change in daily net present value related to the proposed terms?

C. Do you recommend that J James initiate the cash discount?

Reference no: EM132404394

Questions Cloud

Paper about the theories of representation : Explain how the podcast, series episode, or movie you watch explores, illustrates, or alters our understanding of representation and/or the related issues
Implied effective annual interest rate : At what implied effective annual interest rate are you loaning money to your? customers?
Was the association in compliance with fair housing laws : Discussion Prompt: Under the ADA, disabled individuals have the right to keep service animals in rental housing.
What is the payoff on nyu graduation day : (a) If you buy 1 share of RAIN and 1 share of SUN, what is the payoff on NYU graduation day?
What is the 1-day change in value : A. What is the 1-day change in value related to the proposed terms. B. What is the change in daily net present value related to the proposed terms?
Equation after corporate tax and personal income tax : Are the required return of ordinary share in its equation after corporate tax and personal income tax?
Estimate the company growth rate : Assuming the company's cost of equity capital is 7% use the dividend discount valuation model to estimate the company's growth rate.
How does each party satisfy each element of contract : How does each party satisfy each element of a contract? When and how does this contract terminate? Are there any liquidated damages provisions?/
What would be the value of this treasury bond : What would be the value of this treasury bond?

Reviews

Write a Review

Finance Basics Questions & Answers

  How is demand to an existing hotel increased

Increase Demand. In various ways, how is demand to an existing hotel increased? To a destination? To a mode of public transportation?

  Market value of the equity of thompson

The market value of the equity of Thompson, Inc. is $610,000. The balance sheet shows $39,000 in cash and $204,000 in debt, while the income statement has EBIT

  What are important considerations in selecting an investment

You are planning to purchase a house in five years and intend to save a fixed amount of money each month for a down payment. How will you invest your savings and what are important considerations in selecting an investment vehicle?

  Calculate the net profit margin and the sales to total asset

Calculate the net profit margin and the sales-to-total-assets ratio for Salza for 2010 using average total assets. Also calculate the return on total assets in 2010 using average total assets.

  Government show the connection between postings

Mohammad Omar Aly Hassan and nine others were indicted in a federal district court on charges of conspiring to advance violent jihad

  What is its level of inventory

Question 1: Soaring Eagles Corp. has total current assets of $11,666,000, current liabilities of $5,780,000 and a quick ratio of 0.84. What is its level of inventory?

  Research study in the functional area

Find an article in the University Library that contains a research study in the functional area of your own job or a functional area you desire to be a part of someday.

  A fully amortizing mortgage loan is made

Please show how you arrive at your answer. The (FV) that I arrive at isn't the correct one on my calculator.  A fully amortizing mortgage loan is made for $80,000 at 6% interest for 25 years. Payments are to be made monthly.

  Annual rate of return

You purchased 200 shares for XYZ Company stock 10 years ago for $56 a share. The stock paid no dividends but now could be sold for $85 a share. Which of the following is closest to the annual rate of return you earned on this stock?

  What is the pv of the receiver contract

What is the PV of the receiver's contract? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

  What is the real rate of return measured in us dollars

Assume that parity holds. At t=0, a U.S. investor purchases a British stock at £0.7. U. S. inflation is 3%, British inflation is 4%.

  What should be the lease payments

You win a judgment in an auto accident for $275,000. You will immediately receive $135,000 in cash, but must pay your lawyer's fee of $91,666 out of that sum. In addition you will receive $5,500 per year for 20 years for a total of $110,000 after ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd