What is the expected change in net income

Reference no: EM13269617

Blueroot Inc. is considering a change in its financing policy. Currently, it uses maximum trade credit by not taking discounts on its purchases. The standard industry credit terms offered by all its suppliers are 2/10 net 30 days, and the firm pays on time. The new CFO is considering borrowing from its bank, using short-term notes payable, and then taking discounts. The firm wants to determine the effect of this policy change on its net income. Its net purchases are $11,760 per day, using a 365-day year. The interest rate on the notes payable is 10%, and the tax rate is 40%. If the firm implements the plan, what is the expected change in net income?

Reference no: EM13269617

Questions Cloud

Explain a mechanism showing the formation of the product : (a) What is the product. (b) Provide a mechanism showing the formation of the product at a. (c) Suggest a more feasible synthesis condition for the conversion.

Find the impulse response h for the system : 1. Find the system transfer function H(z). 2. Find the impulse response h(n) for the system. 3. Find the inverse transfer function H-1(z). 4. Find the impulse response h(n) for the inverse transfer function H-1(z). 5. Is the system described by H-..

By how much did the dollar depreciate against the yen : During 1995, the yen went from $0.0095 to $0.0125. By how much did the dollar depreciate against the yen?

State a reaction energy diagram : (a) Write the reaction equation, (b) indicate which product is predominant at low temperature, (c) which product is predominant at high temperature, and (d) draw a reaction energy diagram explaining your answers in b and c.

What is the expected change in net income : The interest rate on the notes payable is 10%, and the tax rate is 40%. If the firm implements the plan, what is the expected change in net income?

What is the variance of these returns : You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 2 percent, -12 percent, 27 percent, 22 percent, and 18 percent. What is the variance of these returns?

How much must entertainer aid deposit each year : How much must Entertainer's Aid deposit each year to accumulate to the required amount?

Calculate the length of the blades of a 1 mw wind turbine : (a) Calculate the length of the blades of a 1 MW wind turbine. Assume the air density is 1.0 kg/m^3, average wind speed is 15 m/sec, and overall efficiency is 25%. (b) An ideal solar cell is operating at30°C. The reverse saturation curren is0.15 mi..

User Account

All Pages