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BF 7 hw solutions submitted

BF 7 hw solutions submitted - Don’t switch to level...

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Feb. 18 Ch. 7 P1 10,000 initial amt +70,000 deposits -25,000 checks           55,000     balance 15,000 float P2 a.  4,000,000 daily collections x 2.5 days speed up = 10,000,000 additional  collections 3,000,000 daily disbursements x 1.5 days slow down = 4,500,000 delayed  disbursement 10,000,000 additional collections 4,500,000 delayed disbursements 14,500,000 freed up funds        b.  14,500,000 freed up funds X 6% interest rate $870,000 interest on freed-up cash P14 250,000 13.5%
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$33,750 Savings  30,000 Less: inc costs  (33,750) Loss (3,750)
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Unformatted text preview: Don’t switch to level production If int. rates fall to 12% or less, the switch would be feasible 30,000 savings /250,000 inc. inv. = 12% P15 a. 100,000-10,000 90,000-3,000-79,000 >> .79x$100,000 8,000-3,200 4,800 b. Incremental return on sales = incremental income / incremental sales = 4800/100,000 = 4.8% c. rec. turnover = sales/rec. turnover = 6x Sales/rec. turnover = 100,000/6 =16,666.67 Incremental return on new avg. investment = 4,800/16,666.67 = 28.80%...
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