{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Ch 14 and 15 homework solutions

Ch 14 and 15 homework solutions - FINC 330 CHAPTERS 14 AND...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
FINC 330 CHAPTERS 14 AND 15 HOMEWORK SOLUTIONS Chapter 14: P14-2. a. AAI = 365 days ÷ 8 times inventory = 46 days OC = AAl + ACP = 46 days + 60 days = 106 days CCC = OC - APP = 106 days - 35 days = 71 days b. Daily cash operating expenditure = total outlays ÷ 365 days = $3,500,000 ÷ 365 = $9,589 Resources needed = daily expenditure × CCC = $9,589 × 71 = $680,819 c. Additional profit = (daily expenditure × reduction in CC) × financing rate = ($9,589 × 20) × 0.14 = $26,849 P14-6. a. EOQ = (2 O) (2 800 $50) = = 200 units C 2 S × × × × b. Average level of inventory = 200 units 800 units 10 days 2 365 × + = 121.92 units c. Reorder point = (800 units 10 days) (800 units 5 days) 365 days 365 days × × + = 32.88 units d. Change Do Not Change (2) carrying costs (1) ordering costs (3) total inventory cost (5) EOQ (4) reorder point
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
P14-8. a. Current units = $360,000,000 ÷ $60 = 6,000,000 units Increase = 6,000,000 × 20% = 1,200,000 new units Additional profit contribution = ($60 - $55) × 1,200,000 units = $6,000,000 b. Average investment in accounts receivable = total variable cost of annual sales turnover of A/R Turnover, present plan = 365 6.08 60 =
Image of page 2
Turnover, proposed plan = 365 365 5.07 (60 1.2) 72 = = × Marginal investment in AR: Average investment, proposed plan: * (7,200,000 units $55) 5.07 × = $78,106,509 Average investment, present plan: (6,000,000 units $55) 6.08 × = 54,276,316 Marginal investment in AR = $23,830,193 * Total units, proposed plan = existing sales of 6,000,000 units + 1,200,000 additional units.
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern