HW1 - Fall 2009 BMGT 385 Professor Elmaghraby HW1 This...

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Fall 2009 Professor Elmaghraby BMGT 385 HW1 This homework is due Sept. 23 before class starts. Please staple your answers, write neatly and clearly and put your name on the top of each page of your HW. Please be certain to show all of your supporting work for each problem in order to receive full credit for each problem. 1. Cash Flow problem (a) A hardware vendor manufactures $300 million worth of PCs per year. On average, the company has $45 million in accounts receivable, how much time elapses between invoicing and payment in terms of days if each year is 360 days? (5 points) (b) Moreover, assuming that there is an average annual opportunity percentage cost of 10% (i.e., if you are promised by one of your buyer to receive 1000$ in one year from now, you could have made the average 1100$ in a year (by investing somewhere else) if you had received that 1000 $ today. Hint: think of exactly annual holding cost rate of inventory), what would be on average the opportunity cost in year for this vendor for 1 $ worth of account receivable?
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