Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Byron Sporting Goods operates in Miami, Florida. The firm produces and distributes a full line of athletic equipment on a nationwide basis. The firm currently uses a centralized billing system. Byron Sporting Goods has annual credit sales of $438 million. Austin National Bank has presented an offer to operate a concentration-banking system for the company. Byron already has an established line of credit with Austin. Austin says it will operate the system on a flat-fee basis of $200,000 per year. The analysis done by the bank's cash management services division suggests that 3 days in mail float and 1 day in processing float can be eliminated.

Because Byron borrows almost continuously from Austin National, the value of the float reduction would be applied against the line of credit. The borrowing rate on the line of credit is set at an annual rate of 8 percent. Furthermore, because of the reduction in clerical help, the new system will save the firm $66,000 in processing costs. Byron uses a 365-day year in analyses of this sort. Should Byron accept the bank's offer to install the new system?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M947406

Have any Question? 


Related Questions in Basic Finance

It is december 2008 and you have just accepted an

It is December 2008, and you have just accepted an appointment as the Chief Financial Officer (CFO) position at Midwest Healthcare System. Dr. Montana is the system's President and Chief Executive Officer (CEO). Your pee ...

A small country has a straight-line upward-sloping domestic

A small country has a straight-line, upward-sloping domestic supply curve and a straight-line, downward-sloping domestic demand curve for one of its key export products. The world price for this product is $150 per ton. ...

An insurance company has determined that the number of

An insurance company has determined that the number of motor insurance claims per customer per year has the following probability distribution: No. of claims (x) 0 1 2 3 4 >4 P(x) ? 0.24 0.11 0.03 0.01 0 (a)   What is th ...

Commercial paper rates explain how investors preferences

Commercial Paper Rates: Explain how investors' preferences for commercial paper change during a recession. How should this reaction affect the difference between commercial paper rates and T-bill rates during recessionar ...

Investment finance assignment- outcomes - this assignment

Investment Finance Assignment- Outcomes - This assignment has been structured in accordance with the following Graduate Attributes: Ability to demonstrate the quantitative skills taught in the unit. Use of computing skil ...

Impact of economic crises on interest rates when economic

Impact of Economic Crises on Interest Rates : When economic crises in countries are due to a weak economy, local interest rates tend to be very low. However, if the crisis was caused by an unusually high rate of inflatio ...

1 an experiment is conducted as follows a die is rolled and

1. An experiment is conducted as follows: A die is rolled and the number of spots is noted. If the number of spots is 5 or fewer the experiment is over. If a 6 is rolled, then a coin is tossed and we note if it is H or T ...

What is the future value of 100 a month for 48 years at 8

What is the future value of $100 a month for 48 years at 8 percent interest? Assume monthly compounding. What is the future value of $100 a month for 41 years, beginning today at 8 percent interest? Assume monthly compou ...

A stock is currently selling for 39 per share a call option

A stock is currently selling for $39 per share. A call option with an exercise price of $45 sells for $3.47 and expires in three months. If the risk-free rate of interest is 4.6 % per year, compounded continuously, what ...

The cost of equity for rj corporation is 84 percent and the

The cost of equity for RJ corporation is 8.4 percent and the debt equity ratio is .6. The expected return on the market is 10.4 percent and the risk-free rate 3.8 percent. using the common assumption for the debt beta, w ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate