NEKO Inc. deals with various clients throughout the city and is attempting to collect its accounts receivable more efficiently. A major bank has offered a lock-box system for NEKO at a cost of P180,000 per year. NEKO averages 300 receipts daily at an average of P5,000 each. Short-term interest is at 8% annually. What reduction in average collection time would be needed to justify the lock-box system? (Use a 360-day year)
Q: Convert the following cash flows to a uniform payment series, where n=3 starting at year 3 and i=3%....
A: The value of same amount of money will be different at various point of time. This is because, the v...
Q: Determine the present value of the following cash flows; P4,000 at the end of 4th month and every mo...
A: Given information= P4000 at the end of 4th month and every month thereafter till the 12th Month Inte...
Q: Automotive Excellence Inc. borrowed $17,000.00 on May 11 with an interest rate of 10.7% per annum. O...
A: Total Amount borrowed On May 11th is $17,000.00 Interest rate per annum is 10.7% Amount repaid on Ju...
Q: Balance sheet Liabilities (in KD) Assets (in KD) 80000 20000 Accounts payable Cash Accrued expenses ...
A: The question is related to Ratio Analysis. The Inventory Turnover Ratio is calculated with the help ...
Q: J&R Wealth is considering an investment with the following cash flow: ΕΟΥ Cash Flow 1-10 10 $500,000...
A: Initial Cost = $500,000 Cash Inflow = $92,500 Cash flow in 10 Years = $50,000 MARR = 12%
Q: ndholders. areholders. areholders and the federal government.
A: Interest tax sheild is the reduced cost of capital due to the advantages of tax deductions.
Q: Yesenia purchased a car for $21,394. She obtained a 6 year term loan at an interest rate of 6%. She ...
A: A loan is an agreement between two parties where one party borrows money from the other party with t...
Q: 3. The Corporation's net operating income last year was P103,000; its interest expense was P17,000; ...
A: Times-Interest Earned Ratio refers to the ratio which measures the ability of the company in meeting...
Q: Consider a two period economy. You can buy stocks in period 0, and then sell them in period 1. You c...
A: Here; We have Stock price =$100 Dividend Yield is zero as stock pays no dividend Time period is 1 ye...
Q: The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000...
A: “Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first ...
Q: Both Bond Tony and Bond Peter have 10 per cent coupons, make semi-annual payments, and are priced at...
A: Given, Coupon rate is 10% Bond Tony has 3 years time to maturity Bond Peter has 20 years time to mat...
Q: ensure adequate liquidity
A: Adequate liquidity refers to the sufficient amount that a business should have to meet its liabili...
Q: Use the following information to answer Multiple Choice Problems 16 to 23: Future Electronics Corp. ...
A: We will consider the whole project details for computing the initial cash flow, cash flow at year 3,...
Q: The assets of Eve-Ate-It Farm consist entirely of current assets and net plant and equipment. The fi...
A: Introduction to Debt Debt is referred to as that money that is borrowed by one person from another t...
Q: The Salad Oil Storage Company (SOS) has financed a large part of its facilities with long-term debt....
A: As SOS has financed a large part with long term debt so there is a chance that the shareholder can l...
Q: If P30,000.00 is deposited each year for 10 years, how much annuity can a person get annually from t...
A: Amount deposited each year for 10 years is P30,000 Cost of monry is 14% Total number of withdrawals ...
Q: Lamas has a weighted average cost of capital of 8.4 percent. The company's equity is II percent, and...
A: The debt Equity ratio states how much debt the company has in its capital structure. Generally the l...
Q: Case Analysis 1. in 1982, XYZ cement company began its plant operation in Pampanga. Local residents ...
A: Problems faced by residents due to XYZ cement company:: i) Loud noise - Remark:: Causing sound pollu...
Q: Consider the following options for a $153,000 mortgage. Calculate the monthly payment and total clos...
A: Data given: Mortgage = $153,000 Option 1: N= 30 years Rate = 4.3% Closing cost = $1500 and no point...
Q: Brandon purchased a car using a 5-year car lease at 5.80% compounded quarterly that required her to ...
A: The cost of the car can be calculated by adding the downpayment and present value of the loan paymen...
Q: How much money should you invest at an interest rate of 6% compounded monthly, to have P400,000 in 5...
A: Present Value can be calculated using PV function in excel PV (rate, nper, pmt, [Fv], [type]) Rat...
Q: A credit is paid as follows: a down payment corresponding to 30% of the value of the credit, 16 equa...
A: Fist we need to calculate present value of all payments starting at 3 months after by using annuity ...
Q: Report on Corporate Lawsuits- BANK OF AMERICA- $16 BILLION. Write COMPANY BACKGROUND for about 600-7...
A: Attorney General Eric Holder and Associate Attorney General Tony West announced on august 21, 2014 t...
Q: The cost of a merger may outweigh the potential gain if the: present value of the acquired firm exce...
A: Cost of merger will be Cost of merger =Market value of target company-intrinsic value of target com...
Q: Dufner Co. issued 14-year bonds one year ago at a coupon rate of 6.4 percent. The bonds make semiann...
A: Par value (FV) = $1000 Coupon rate = 6.4% Semi annual coupon amount (C) = 1000*0.064/2 = $32 Years t...
Q: Given the information in the following table, what is the expected return of the security?
A: Expected Return: It refers to the amount of gain/loss anticipated by the investor on an investment....
Q: If the company requires a return of 13 percent on such undertakings, what is the NPV of the project?...
A: Net present value (NPV) refers to the variance between the present value (PV) of cash inflows and in...
Q: Compute for the: 1.) Call Option - Total Value 2.) Call Option - Intrinsic Value 3.) Call Option ...
A: The question is based on the concept of valuation of an option contract. Total value is the market ...
Q: Calculate the simple interest due on a 72-day loan of P3,000 if the annual interest rate is 4%.
A: Loan amount (P) = P3000 Interest rate (r) = 4% Period (d) = 72 days
Q: Delta Sonic, a chain of full service automotive detailers, is considering introducing a new 15-minut...
A: To Find: Projected incremental sales
Q: McCabe Corporation is expected to pay the following dividends over the next four years: $15, $11, $9...
A: Answer - Formula for Share Price P0 = D0 (1+g) / [R-g]= D1 / [R-g]Price at P4 -= D5 / [R-g]= (2.95x1...
Q: ind the simple interest of P210,000 for 3 years at 5 %.
A: We know that simple interest can be calculated using the formula given below. Simple Interest = (Pri...
Q: el, and September futures are trading at $5.66 per bushel. What approximate purchase price per bushe...
A: The goal of using futures as part of a hedging strategy is to reduce the risk of losing money owing ...
Q: Write the 4 Formulas for Uniform Annuity Series 1 Find F/A 2 Find P/A 3 Find A/P 4 Fina A/F 5 P (Pr...
A: An annuity is a series of equal payments made over a set period of time. While payments in an ordina...
Q: You just leased a Honda Civic that sells for $25,350. The terms of your lease you to make 60 payment...
A: The payment are done monthly that includes the interest and payment of the loan.
Q: 8.14 (LG 8.5, 8.10) What is the after-tax present worth of a chip placer if it costs $55 000 and sav...
A: With the help of the given data we will first make a table representation for showing up the computa...
Q: A corporation must decide whether to introduce a new product line. The new product will have startup...
A: NPV is the difference between present value of cash inflows and initial investment. NPV =PV of cash ...
Q: Calculate the amount of money Dylan had to deposit in an investment fund growing at an interest rate...
A: Interest rate = 2% Annuity amount = $11,000 Time period = 2 years
Q: Mr. Jerome has an outstanding balance of $12000 on his credit card. The interest rate on the card is...
A: Concept . Annual percentage rate. It is yearly rate of interest which the individual must pay on loa...
Q: What is the cost of new common stock if the required rate of return is 9%, the constant dividend gro...
A: The cost of issuing new securities is known as floatation cost. It includes legal expenses, registra...
Q: 5. A $200 loan is offered with an annual simple interest rate of 6 percent. How much would the borro...
A: Solution:- When a loan is taken, the lender charges interest on it and in simple interest method, in...
Q: Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over t...
A: Market value is another term for current pricing. It is the most recent price at which a share of st...
Q: Type 2D: ABC Inc. is considering the acquisition of Togo Company. respectively. ABC's financial mana...
A: Given, Value of ABC is $ 40 million Togo is $15 million
Q: You buy a semiannually paying coupon bond with a face value of $1,000 and a coupon rate of 8%. The b...
A: Given, Face value of bond is $1000 Coupon rate is 8% Time to maturity is 20 years.
Q: The 4.55 percent bond of Dominic Cyle Parts has a face value of $1.000, a maturity of 12 years, semi...
A: Face value of bond (FV) = $1000 Coupon rate = 4.55% Semi annual coupon amount (C) = 1000*0.045/2 = ...
Q: Assume oat forward prices over the next 3 years are $2.30, $2.40, and $2.33, respectively. Effective...
A: We can calculate the 3-year swap price by using the interest rates and forward price for the 3 years...
Q: You want to start saving for your first car which costs R300 000. You decide to save by investing in...
A: The investment made monthly grow to much larger amount due to the power of compounding over the peri...
Q: Suppose XYZ Corporation's stock price ses or falls with equal probability by $20 each month, startin...
A: Call option gives holder a right to buy a stock, but it is not an obligation to buy the stock. Optio...
Q: Your firm has taken out a $480,000 loan with 8.1% APR (compounded monthly) for some commercial prope...
A: The loans are paid the monthly payments that carry the payment for interest and the payment for the ...
Q: Katy invests $13,000 at 6% simple interest for 38 years. Round your answers to the nearest cent. How...
A: Principal Amount = $13,000 Interest Rate = 6% Time Period = 38 Years
NEKO Inc. deals with various clients throughout the city and is attempting to collect its accounts receivable more efficiently. A major bank has offered a lock-box system for NEKO at a cost of P180,000 per year. NEKO averages 300 receipts daily at an average of P5,000 each. Short-term interest is at 8% annually. What reduction in average collection time would be needed to justify the lock-box system? (Use a 360-day year)
Step by step
Solved in 2 steps
- Bulldogs Inc. deals with various clients throughout the city and is attempting to collect its accounts receivable more efficiently. A major bank has offered a lock-box system for Bulldogs at a cost of P180,000 per year. Bulldogs averages 300 receipts daily at an average of P5,000 each. Short-term interest is at 8% annually. What reduction in average collection time would be needed to justify the lock-box system? (Use a 360-day year)No need to type the word "Days" just the number e.g. X.XXInc. deals with various clients throughout the city and is attempting to collect its accounts receivable more efficiently. A major bank has offered a lock-box system for Bulldogs at a cost of P180,000 per year. Inc. averages 300 receipts daily at an average of P5,000 each. Short-term interest is at 8% annually. What reduction in average collection time would be needed to justify the lock-box system? (Use a 360-day year)Bird's Eye Treehouses, Incorporated, a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days. Assume 365 days a year. Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Annual interest rate on money market securities 880 $830 $.10 3.2% a. What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose in addition to the variable charge that there is an annual fixed charge of $3,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely…
- Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lockbox system. She forecasts that 220 payments a day will be made to lockboxes with an average payment size of $3,300. The bank’s charge for operating the lockboxes is $0.58 a check. Assume an interest rate of 8% and a 365-day year. What reduction in the time to collect and process each check is needed to justify use of the lockbox system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Bird's Eye Treehouses, Incorporated, a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days. Assume 365 days a year. Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Annual interest rate on money market securities 850 $ 800 $.10 a. NPV b. NPV 3.2% a. What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose in addition to the variable charge that there is an annual fixed charge of $3,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Smith Inc. currently fills mail orders from all over the country and receipts were received in its head office. The company's average accounts receivable is P3,125,000 and is financed by a bank loan with 10% interest. Smith is considering a regional lockbox system to speed up collections. This system is projected to reduce the average accounts receivable by 15%. The annual cost of the lockbox system is P25,000. What is the estimated net annual savings in implementing the lockbox system? A. 22,985 B. 28,455 C. 25,750 D. 21,875
- Bulldogs Inc. currently fills mail orders from all over the country and receipts were received in its head office. The company’s average accounts receivable is P3,125,000 and is financed by a bank loan with 10% interest. Bulldogs is considering a regional lockbox system to speed up collections. This system is projected to reduce the average accounts receivable by 15%. The annual cost of the lockbox system is P25,000. What is the estimated net annual savings in implementing the lockbox system? P22,985 P25,750 P28,455 P21,875Bulldogs Inc. currently fills mail orders from all over the country and receipts were received in its head office. The company’s average accounts receivable is P3,125,000 and is financed by a bank loan with 10% interest. Bulldogs is considering a regional lockbox system to speed up collections. This system is projected to reduce the average accounts receivable by 15%. The annual cost of the lockbox system is P25,000. What is the estimated net annual savings in implementing the lockbox system? A. P25,750 B. P21,875 C. P22,985 D. P28,455Inc. currently fills mail orders from all over the country and receipts were received in its head office. The company’s average accounts receivable is P3,125,000 and is financed by a bank loan with 10% interest. Inc. is considering a regional lockbox system to speed up collections. This system is projected to reduce the average accounts receivable by 15%. The annual cost of the lockbox system is P25,000. What is the estimated net annual savings in implementing the lockbox system? P28,455P22,985P25,750P21,875
- Knob, Inc., is a nationwide distributor of furniture hardware. The company now uses a central billing system for credit sales of $198.00 million annually. First National, Knob’s principal bank, offers to establish a new concentration banking system for a flat fee of $150,000 per year. The bank estimates that mailing and collection time can be reduced by four days. Assume a 360-day year. By how much will Knob’s cash balances be increased under the new system? (Enter your answer in dollars not in millions.) Assume that the borrowing rate is 12%. How much extra interest income will the new system generate if the extra funds are used to reduce borrowing under Knob’s line of credit with First National? (Enter your answer in dollars not in millions.) Calculate the total annual cost of the old system if collection costs under the old system are $45,000 per year? (Enter your answer in dollars not in millions.)Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 700 payments a day will be made to lock boxes with an average payment size of $3,500. The bank’s charge for operating the lock boxes is $0.50 a check. The interest rate is 0.011% per day. a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.) Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 700 payments a day will be made to lock boxes with an average payment size of $3,500. The bank’s charge for operating the lock boxes is $0.50 a check. The interest rate is 0.011% per day. a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.)Murkywater Company is considering a lockbox system. Its collection delay is currently 12 days. Reduction in mailing time = 1.5 day Reduction in clearing time = 1.5 day Reduction in firm processing time = 1.0 day Total = 4.0 days The following is also known: Daily interest on Treasury bills = 0.025% Average number of daily payments to lockboxes = 4,000 Average size of payment = $400 A local bank has agreed to operate this lockbox system for a fee of $0.25 per check processed. What are the costs associated with the proposal? Multiple Choice $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000