Thompson Manufacturing Supplies' projected sales for the first six months of 2004 are given below.
Jan. $250,000 April $400,000
Feb. $300,000 May $450,000
March $400,000 June $400,000
40% of sales is collected in the month of the sale, 50% is collected in the month following the sale, and 10% is written off as uncollectible. Cost of goods sold is 70% of sales. Purchases are made the month prior to the sale and are paid during the month the purchases are made (i.e. goods sold in March are bought and paid for in February). Total other cash expenses are $50,000/month. The company's cash balance as of February 1, 2004 will be $40,000. Excess cash will be used to retire short-term borrowing (if any). Thompson has no short-term borrowing as of February 28, 2004. Assume that the interest rate on short-term borrowing is 1% per month. The company must have a minimum cash balance of $25,000 at the beginning of each month. Round all Answers to the nearest $100.
Based on the information in Table 2, what are Thompson's projected total disbursements for April?
Based on the information in Table 2, what are Thompson's projected total receipts (collections) for March?
d. None of the above
Based on the information in Table 2, what is Thompson's projected cash balance as of April 1, 2004?
d. None of the above
Gina Dare, who wants to be a millionaire, plans to retire at the end of 40 years. Gina's plan is to invest her money by depositing into an IRA at the end of every year. What is the amount that she needs to deposit annually in order to accumulate $1,000,000? Assume that the account will earn an annual rate of 11.5%. Round off to the nearest $1.
What is the present value of $150 received at the beginning of each year for 16 years? The first payment is received today. Use a discount rate of 9%, and round your answer to the nearest $10.
The firm should accept independent projects if:
a. the payback is less than the IRR.
b. the profitability index is greater than 1.0.
c. the IRR is positive.
d. the NPV is greater than the discounted payback.
Given the following annual net cash flows, determine the IRR to the nearest whole percent of a project with an initial outlay of $1,520.
Year Net Cash Flow
3 $ 500
Abbott Corp. has a debt ratio of 37.5%, a days sales outstanding ratio of 49, a return on equity of 22.6%, a cash turnover of 14%, days sales in inventory of 83, a times interest earned of 1.5, and a days payables outstanding ratio of 36. What is Abbott's cash conversion cycle?
Assume that liquid funds can be invested to yield 12%. If annual remittance checks total $2 billion, what is it worth for the firm to reduce float by one day?
Stern Corporation uses semi-hex joints in its manufacturing process. If Stern's total demand for the joints for next year is estimated to be 15,000 units, and if the cost per order is $80, what is Stern's economic order quantity of semi-hex joints? Assume that carrying costs for semi-hex joints are $.51 per unit and round off to the nearest 100 units.
National Geographic is replacing an old printing press with a new one. The old press is being sold for $350,000 and it has a net book value of $75,000. Assume that National Geographic is in the 40% income tax bracket. How much will National Geographic pay in income taxes from the sale?
Shawhan Supply plans to maintain its optimal capital structure of 30% debt, 20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt-10%; preferred stock-11%; and common stock-18%. Assuming a 40% marginal tax rate, what after-tax rate of return must Shawhan Supply earn on its investments if the value of the firm is to remain unchanged?
Suppose International Trading Enterprises purchased 100,000 lbs. of Bavarian chocolate for a price of 356,960 German marks. If the current exchange rate is 1.7848 marks to the U.S. dollar, what is the purchase price of the chocolate in dollars?