You are considering implementing a lockbox system for your firm. The system is expected to reduce the average collection time by 3 days. On an average day, your firm receives 430 checks with an average value of $91 each. The daily interest rate on Treasury bills is 0.015 percent. What is the anticipated amount of the daily savings if this system is implemented?
Q: Byrd Enterprises has no debt. Its current total value is $47.2 million. Assume the company sells…
A: Answer:The debt-equity ratio without considering taxes is calculated using the formula: (rounded…
Q: A company wants to have $50,000 at the beginning of each 6-month period for the next 4.5 years. If…
A: Final amount = $50,000Time = 4.5 years Rate = 6.23% compounded semi-annually
Q: A stock trades at $100 today. In a year it will either be $120 or $30. What is the price of a…
A: Option Market is a Stock Market Strategy. Under which investor will not purchase the shares of the…
Q: A company wants to have $50,000 at the beginning of each 6-month period for the next 4+1/2 years. If…
A: Final amount = $50,000Time = 4.5 years Rate = 6.23% compounded semi-annually
Q: Abe deposited a sum of money at the end of every month for 15 years at 8.5% compounded monthly.…
A: Quarterly withdrawal=$5905Withdrawal period=17 yearsInterest rate=3.5% during withdrawalInterest…
Q: Bob and Angelique Mackenzie bought a property valued at $84,000 for $15,000 down with the balance…
A: Loans are paid by equal monthly payments that carry the payment for interest and payment for loan…
Q: Dyrdek Enterprises has equity with a market value of $12.7 million and the market value of debt is…
A: weight of equity= 12.7/(12.7 + 4.5)= 0.738372093Weight of debt = 4.5/(12.7 +4.5)= 0.261627907WACC =…
Q: n either stock B or C. She wants a portfolio with an expected return of at least 13.5% and as low a…
A: A lower standard deviation indicates less risk in a portfolio. Therefore, when considering…
Q: EB19. 11.4 Wallace Company is considering two projects. Their required rate of return is 10%.…
A: IRR is also known as Internal rate of Return. It is a capital budgeting technique which helps in…
Q: Any corporation not meeting the requirements for an S corporation is automatically a C corporation.
A: C corp operates as a conventional business structure in the United States, subject to corporate…
Q: Problem 28-17 Break-Even Quantity The Branson Corporation is considering a change in its cash-only…
A: Credit Cost = Price per unit as per new policy x Required ReturnIn the given case, the break even…
Q: Consider company Macrosoft, whose current stock price is 542. The board of directors of Macrosoft…
A: To determine the amount of cash that the investor will receive after the spin-off involving…
Q: Which statement is FALSE regarding bonds?Select one:The pay back their face value within their…
A: Bonds, when issued, represent debt obligations of the firm, not equity. Therefore, their issuance…
Q: You own a piece of raw land in an up-and-coming area in Gotham City. The costs to construct a…
A: This problem involves decision-making under uncertainty and requires calculating the Net Present…
Q: A company can buy a machine that is expected to have a three-year life and a $30,000 salvage value.…
A: NPV (Net Present Value) is a financial metric used to evaluate the profitability of an investment by…
Q: Cash Fixed assets Total Market Value Balance Sheet $ 156,000 560,010 $ 716,010 Equity Total $…
A: Data given:Market value of equity=$716010No. of shares outstanding= 29000Dividend declared per…
Q: How long will it take $52,000 placed in a savings account at 10% interest to grow into $77,000? 5.12…
A: Present Value = pv = $52,000Interest Rate = r = 10%Future Value = fv = $77,000
Q: Suppose Apple is considering expanding its product line to include the new electric car, iCar. The…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: A 20 year loan of $100, 000 at i = 6% is paid off by paying 125% of each year’s interest at the end…
A: Term of Loan20yearsLoan amount100000Interest rate6%
Q: Suppose you have $2,300 and plan to purchase a 10-year certificate of deposit (CD) that pays 10.4%…
A: A Certificate of Deposit (CD) is a financial tool that offers a predetermined interest rate for a…
Q: Ivanhoe Bakeries recently purchased equipment at a cost of $630,500. Management expects the…
A: MIRR =
Q: Binford Tools has an expected perpetual EBITDA equal to $67k. Its tax rate is 35%. Binford has $139k…
A: EBITDA=$67000Debt=$139000Cost of debt=6.85%Unlevered cost of capital=10.25%Tax rate=35%
Q: a. Invest all $10,000 in the stock, buying 100 shares. b. Invest all $10,000 in 1,000 options (10…
A: Options are financial instruments that provide investors with the right, but not the obligation, to…
Q: Suppose you invest 70% of your fund in stock A and the other 30% in stock B. If stock A and B are…
A: Portfolio return refers to the rate of return that is being earned by the investors over the…
Q: Maram & Company Case: Maram & Company are manufacturers of furniture. They are contemplating the…
A: Making decisions about capital budgeting entails assessing and choosing capital expenditures or…
Q: Aria Acoustics, Incorporated (AA), projects unit sales for a new 7-octave voice emulation mplant as…
A: YearUnit Sales174,400279,800385,400482,700569,500Selling price = $325Variable cost per unit =…
Q: an increase in a firm's expected growth rate would cause its required rate of return to fluctuato…
A: increase
Q: Generally speaking, short-term bonds have lower yields than long-term bonds. True False
A: Bonds are financial instruments representing debt obligations issued by various entities, including…
Q: In June 2009, Cisco Systems had a market capitalization of $113 billion. It had A-rated debt of $14…
A: Market capitalization = $113 billionA-rated debt = $14 billionCash & Short term investments =…
Q: you have a 5-year, interest-ony loan at 5 percent interest. The firm originally borrowed $100,000.…
A: Amount of loan = $100,000Interest rate = 5%Period 5 years
Q: hat is the discounted value of deposits of $250.00 made at the beginning of ery three months for…
A: Here we will use the concept of time value of money. As per the concept of time value of money it is…
Q: Assume the current Treasury yield curve shows that the spot rates for six months, one year, and one…
A: Price of a bond means the price at which the bond is currently trading on the market.So, price the…
Q: Universal Foods has a debt-to-value ratio of 36%, its debt is currently selling on a yield of 8%,…
A: WACC stands for weighted average cost of capital. A company’s capital is made from different sources…
Q: fill in the blanks using this information: Theoretical Housing Situation: Renting: Monthly Rent:…
A: The objective of this question is to calculate the cost of renting versus buying a home using the…
Q: Degree of operating leverage (DOL) measures the sensitivity of OCF in response to changes of The…
A: We have formula,Degree of operating leverage(DOL) = % change in operating income/% change in sales
Q: Which of the following statement is true about financial managers? I. The principal goal of a…
A: The primary goal of financial management is to achieve both profit maximization and wealth…
Q: Which item should be included on cash flow estimation in capital budgeting analysis?
A: 1.1. Cash flow estimation in capital budgeting:The correct answer is:c. depreciationDepreciation…
Q: You have information on 153 returns of ABC. Among these, the lowest 10 returns are: Return -21% -22%…
A: Answer:To calculate Amber’s Value at Risk (VaR) at the 4% level, we’ll use the…
Q: Which of the following is true about perpetuities? O All else equal, the present value of a…
A: All of the above are true statements.because low interest rates and higher cash flows raise value
Q: Which of the following statements is true about different types of firms? O Corporations do not have…
A: Statement D is accurate as limited liability companies share similarities with corporations…
Q: What is the equivalent annual annuity (EAA) of the project S? WACC 9.00% Year 01234 CFS -$1,000 650…
A: Equivalent annual cost is the cost of operating and maintaining an asset annually. It is also called…
Q: Carla Medavoy will invest $7,520 a year for 20 years in a fund that will earn 15% annual interest.…
A: Payment = p = $7520Time = t = 20 YearsInterest Rate = r = 15%
Q: (years) Price 1 $97.25 2 $94.53 3 $91.83 4 $89.23 5 $87.53 The above table shows the price per $100…
A: Price = PV = $91.83Years to maturity = N = 3 YearsFace value = FV = $100
Q: The Federal Reserve Bank develops model laws, regulations, and standards for state insurance…
A: Monetary policy in the United States comprises the Federal Reserve's actions and communications to…
Q: A firm is valued at $223, including $58 of cash. The firm is 45% debt financed and the remainder…
A: Answer:Let’s break down the initial firm valuation:Equity value = Total value -…
Q: You intend to buy Berrymore Inc.’s common stock at $100 per share, hold it one year and sell after…
A: Expected Rate of Return =
Q: As we increase the number of stocks in a portfolio, the standard deviation returns of the portfolio…
A: The measurement of the degree to which each data point deviates from the mean or average value is…
Q: Consider company Macrosoft, whose current stock price is 542. The board of directors of Macrosoft…
A: To determine the amount of cash that the investor will receive after the spin-off involving…
Q: Carolina Company is considering Projects S and L, whose cash flows the table below shows. These…
A: Capital budgeting refers to the concept used for evaluating the viability of the project considering…
Q: A company is evaluating the replacement of the office copier. Both the market value of the old…
A: When evaluating the replacement of an office copier, the relevant factors to consider include not…
You are considering implementing a lockbox system for your firm. The system is expected to reduce the average collection time by 3 days. On an average day, your firm receives 430 checks with an average value of $91 each. The daily interest rate on Treasury bills is 0.015 percent. What is the anticipated amount of the daily savings if this system is implemented?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
- Your firm has an average receipt size of $90. A bank has approached you concerning a lockbox service that will decrease your total collection time by 2 days. You typically receive 9,100 checks per day. The daily interest rate is 0.019 percent. If the bank charges a fee of $200 per day, what is the NPV of the lockbox project? NPV What would the net annual savings be if the service were adopted? Net annual savingsYour firm has an average receipt size of $60. A bank has approached you concerning a lockbox service that will decrease your total collection time by 2 days. You typically receive 8,500 checks per day. The daily interest rate is 0.02 percent. If the bank charges a fee of $190 per day, what is the NPV of the lockbox project? What would the net annual savings be if the service were adopted?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.)
- 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.)Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 800 payments a day will be made to lock boxes with an average payment size of $3,000. The bank’s charge for operating the lock boxes is $0.50 a check. The interest rate is 0.015% 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.) b. Is it worthwhile to adopt the system? (Yes/No) c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 300 payments a day will be made to lock boxes with an average payment size of $2,000. The bank’s charge for operating the lock boxes is $0.40 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. b. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system.
- What is the expected annual savings from a lock-box system that collects 150 checks per day averaging P500 each and reduces mailing ang processing time by 2.5 and 1.5 days, respectively, if the annual interest is 7%?Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 600 payments a day will be made to lock boxes with an average payment size of $2,000. The bank’s charge for operating the lock boxes is $0.30 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.) b. Is it worthwhile to adopt the system? multiple choice Yes No c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 300 payments a day will be made to lock boxes with an average payment size of $2,000. The bank’s charge for operating the lock boxes is $0.40 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.) Net Daily Advantage _________________ b. Is it worthwhile to adopt the system? Yes No c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
- Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 400 payments a day will be made to lock boxes with an average payment size of $3,000. The bank's charge for operating the lock boxes is $0.50 a check. The interest rate is 0.012% per day. a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. Note: Do not round intermediate calculations. b. Is it worthwhile to adopt the system? c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Net daily advantage b. Is it worthwhile to adopt the system? c. Minimum reduction in time $ Yes (56) 1.39 daysPlease provide the steps to solving this problem using a financial calculator: You just opened a brokerage account, depositing $3,500. You expect the account to earn an interest rate of 9.652%. You also plan on depositing $4,500 at the end of years 5 through 10. What will be the value of the account at the end of 20 years, assuming you earn your expected rate of return?You owe $6000 on your Chase card, and it has an APR of 21.99%. In the mail, you get an offer from another credit card company that offers you 0% APR for the first 12 months. What is a strategy you can take to help save you money? How can this strategy, however, prove dangerous potentially?