What is the effective cost of borrowing in this case

Assignment Help Financial Management
Reference no: EM13813489

Your firm has an average collection period of 39 days. Current practice is to factor all receivables immediately at a 2.00 percent discount.

What is the effective cost of borrowing in this case?

Reference no: EM13813489

Questions Cloud

Learning team project evaluation and control : Learning Team Project Evaluation and Control
Details the benefits and drawbacks of a postmortem review : Details the benefits and drawbacks of a postmortem review
What is the amount of the nest egg needed : Your uncle wants to retire in 20 years and expects his retirement to last 25 years. He wants to take out (i.e., withdraw) $2,500 at the end of every month over those 25 years. Assume that he can earn 6% per year on his investments. First, what is the..
Repaid in equal monthly payments : XYZ Company borrows $60,000 today to be repaid in equal monthly payments over 4 years. The loan has an annual interest rate of 6%. SHOW all TVM buttons used on the TI BAII Plus Calculator.  What is the monthly payment? What is the total interest paid..
What is the effective cost of borrowing in this case : Your firm has an average collection period of 39 days. Current practice is to factor all receivables immediately at a 2.00 percent discount. What is the effective cost of borrowing in this case?
An investment opportunity-similar risk investment : You expect to receive $3,000 in 3 years (i.e., end of year 3). Then you plan to invest it earning 5% per year. SHOW ALL WORK using TVM buttons on the TI BAII Plus Calculator. What will you have at the end of year 8? You are presented with an investme..
Reasonable cost of capital for average-high-low-risk project : Suppose a firm estimates its WACC to be 10%. Should the WACC be used to evaluate all of its potential projects, even if they vary in risk? If not, what might be "reasonable" costs of capital for average-, high-, and low-risk projects?
Length of the inventory conversion period : Sherwood Packing has sales of $3.2 million and cost of goods sold is 65% of sales. If Sherwood's inventory averaged $0.4 million last year, what was the length of the inventory conversion period?
Recoup the original additional investment in working capital : Targaryen Aeronautics is exploring the possibility of making a significant purchase of a new alternative aircraft technology to add to their current fleet - a dragon. The purchase price of the dragon is expected to be $4,000,000 with additional shipp..

Reviews

Write a Review

Financial Management Questions & Answers

  Differences between minimization and maximization problems

What are the similarities and differences between minimization and maximization problems using the graphical solution approaches of LP?

  Calculate the return on holding the stock for a day

Obtain the closing price, the change in price from the previous day, and the beta and calculate the return on holding the stock for a day.

  Assume semi-annual coupon payments

Assume semi-annual coupon payments. Calculate the price of this bond if the YTM is 9.47%

  What is the future value of his investment cash flows

Chuck Brown will receive from his investment cash flows of $3,155, $3,480, and $3,840 at the end of years 1, 2 and 3 respectively. If he can earn 7.5 percent on any investment that he makes, what is the future value of his investment cash flows at th..

  What minimum yearly cash inflow

A leading producer of fine cast silver jewellery is considering the purchase of new casting equipment that will allow it to expand its product line. The up-front cost of the equipment is $750,000. The company expects that the equipment will produce s..

  Holdings liquidity improved

Sears has a quick ratio of 0.15729 in Jan 2012 and current ratio of 1.11 in Feb 2014, and quick ratio of 0.19438 and current ratio of 1.09. Has Sears Holdings liquidity improved or been degraded over the time period Jan 2012 & Feb 2014. Use ratios.

  Which alternative is better deal

Suppose you are going to buy a car. The cost of car is $24,000. You have $10,000 for down payment. You can borrow the balance of $14,000 from dealership’s finance company at 3% APR, with monthly payment for 36 months or you can borrow from a bank wit..

  How the fed should respond to prevailing conditionsconsider

how the fed should respond to prevailing conditions.consider the existing economic conditions including inflation and

  Future value of this cash flow pattern at end of year five

You have been offered the opportunity to invest in a project that will pay $2,726 per year at the end of years one through three and $5,219 per year at the end of years four and five. These cash flows will be placed in a saving account that pays 9.49..

  Annual contribution to her early retirement fund

Erika and Kitty, who are twins, just received $35,000 each for their 25th birthdays. They both have aspirations to become millionaires. Each plans to make a $5,000 annual contribution to her "early retirement fund" on her birthday, beginning a year f..

  Calculate NPV-IRR and MIRR

Company X wants to acquire another similar company. It estimates that net cash flows for the acquired company will be $8,500,000 per year for 10 years. The cost is $50,000,000. The company's cost of capital is 10 percent. Calculate NPV, IRR, and MIRR..

  Interest compounded monthly

Linda borrows $18,500 from the bank at 12% APR interest compounded monthly to be repaid in 36 equal monthly instalments. What is her monthly payment? What is the interest paid in the first month? What is the principal paid in the first month?

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