Financial Management I_FIN-2AB_20242
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A company writes 22 checks a day for an average amount of $465 each. These checks generally clear the bank 2.75 days after they are written. In addition, the firm generally receives 47 checks with an average amount of $514 each. Deposited amounts are available after an average of 2.25 days. What is the amount of the firm's collection float?
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Collection time will increase if a firm:
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A company, is considering a change in its cash-only sales policy. The new terms of sale would be net one month. The required return is 1.8 percent per month. Under the current policy, price per unit, cost per unit and unit sales per month are $ 1,000, $550, and 1,500 respectively. Under the new policy, price per unit, cost per unit and unit sales per month are $ 1,000, $550, and 1,560, respectively. The NPV of the decision to switch is:
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A company has projected the following sales for the coming year: Q1=$ 53,775, Q2 = $ 60,225, Q3 =$ 69,075, and Q4=$ 74,450. The company places orders each quarter that are 30 percent of the following quarter's sales and has a 30-day payables period. What is the payment of accounts for the third quarter? Assume a month has 30 days.
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A company can reduce its collection time by one day if it installs a lockbox system at a cost of $2,200 a year plus $.52 per transaction. It receives an average of 136 payments per day with an average payment of $7,980 each. The interest rate on money market securities is 3.98 percent. Assume a year has 365 days. What is the NPV of the lockbox system?
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A company has an accounts receivable period of 51.19 days and an accounts payable period of 43.59 days. The company turns over its inventory 5.73 times per year. What is the length of the company's operating cycle? Assume 365 days per year.
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A firm is offered credit terms of 3/203 by 20, net 60. What is the effective annual interest rate on this arrangement? Assume 365 days per year.
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A company has made an agreement with its bank that allows it to borrow up to $12,500 at any time over the next year. This arrangement is called a(n):
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A company has a beginning receivables balance on February 1 of $1,648. Sales for February through May are $2,670, $2,940, $3,820, and $4,450, respectively. The accounts receivable period is 15 days. What is the amount of the April collections? Assume a year has 360 days.
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The EOQ model is designed to minimize:
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