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Unformatted text preview: Kimball International, Inc. SALES/day Bad Debt Rate SE $232,877 bE 1.70% EXPE 2% CPE SA $260,274 bA 2.00% EXPA 2.10% CPA SB $273,973 bB 2.30% EXPB 3% CPB SC $287,671 bC 2.15% EXPC 2.50% CPC k 6.5% i p VCR 45% There is no discount offered so the Z equations only have the last three terms in it. NPV=PV of sales to non-discount takers - Variable operating costs - Variable credit and collection c ZE ZA ZB ZC PV of Sales to no 227,097.91 252,105.39 264,701.50 278,118.40 Var Op costs -104,794.52-117,123.29-123,287.67-129,452.05 Var other costs-0.02-5,402.26-8,127.99-7,105.73 122,303.37 129,579.85 133,285.84 141,560.61 7,276.47 NPVA $40,860,188 ZB-ZE 10,982.47 NPVB $61,670,771 ZC-ZE 19,257.24 NPVC $108,136,810 Cash Flow Operating Activiti $38,000,000 Investing Activitie ($7,000,000) Financing Activiti ($5,000,000) Net Cash Flow $26,000,000 1997 1st qrtr 1996 1st qrtr Net Income $13,521,000 $8,418,000 61.0% increase Earnings per Sha $0.65 $0.40 62.5% increase Credit Admin & Collection Expense Paying Cu Collectio Z=ZA-ZE Quarter ending Sept. 30, 1996 45 66 63 68 costs ustomers' on Period Proposal C should be adopt ed because it adds the most to the value of the company. I ts net present value is the highest of all the scenar ios. I mplementing the change in credit ter ms and standards would result in the most beneficial results in cash f low. ter ms and standards would result in the most beneficial results in cash f low....
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- Spring '10