Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Shanklin Inc. purchases merchandise on terms of 2/15, net 40, and its total gross purchases (i.e., purchases before taking off the discount) are $800,000 per year. What is the maximum amount of costly trade credit Shanklin could get, assuming it abides by the supplie's credit terms? (Assume a 365-day year.)
a. $53,699
b. $56,384
c. $59,203
d. $62,163
e. $65,271

(22.8) Stretching accounts payable
iv. Hefner Inc. business is booming, and it needs to raise more capital. The company purchases supplies on terms of 1/10, net 20, and it currently takes the discount. One way of getting the needed funds would be to forgo the discount, and the firm's owner believes she could delay payment to 40 days without adverse effects. What would be the effective annual rate of funds raised by this action? (Assume a 365-day year.)
a. 10.00%
b. 11.11%
c. 11.75%
d. 12.29%
e. 13.01%

(22.9) ROE and working capital policy
v. Shahrokhi Enterprises follows a moderate current asset investment policy, but it is now considering whether to shift to a restricted or perhaps to a relaxed policy. The firm's annual sales are $400,000; its fixed assets are $100,000; its target capital structure calls for 50% debt and 50% equity; its EBIT is $35,000; the interest rate on its debt is 10%; and its tax rate is 40%. With a restricted policy, current assets will be 15% of sales, while under a relaxed policy they will be 25% of sales. What is the difference in the projected ROEs between the restricted and relaxed policies?
a. 4.3%
b. 4.7%
c. 5.3%
d. 5.8%
e. 6.4%

(22.12) Revolving credit agreement
vi. Gorman Inc. arranged a $10,000,000 revolving credit agreement with a group of banks. The firm paid an annual commitment fee of 0.5% of the unused balance of the loan commitment. On the used portion of the revolver, it paid 1.5% above prime for the funds actually borrowed on a simple interest basis. The prime rate was 9% during the year. If the firm borrowed $6,000,000 immediately after the agreement was signed and repaid the loan at the end of one year, what was its total dollar cost for the year?
a. $617,500
b. $650,000
c. $682,500
d. $716,625
e. $752,456

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M927235

Have any Question? 


Related Questions in Basic Finance

1 if everyone were perfectly honest would there be a role

1. If everyone were perfectly honest, would there be a role for financial intermediaries? 2. Describe some of the information problems in the financial system that lead firms to rely more heavily on internal funds than e ...

You buy a stock for 35 per share one year later you receive

You buy a stock for $35 per share. One year later you receive a dividend of $3.50 per share and sell the stock for $30 per share. 1.What is your total rate of return on this investment?. 2.What is your capital gain or lo ...

Kids inc just purchased a 400000 machine to launch its

Kids Inc. just purchased a $400,000 machine to launch its 3-year project of toy car production. The machine will be fully depreciated to zero by the straight-line method over its five-year economic life, and will be sold ...

1 what forces have been driving the increased

1. What forces have been driving the increased internationalization of business? 2. Explain the different orientations to international business that can be found among executives. 3. What are the various situations in w ...

Explain how closeout netting reduces the credit risk for

Explain how closeout netting reduces the credit risk for two firms engaged in several derivatives contracts ? How does the legal system impose risk on a derivatives dealer? Consider a firm that has assets that generate c ...

List three ways to control preload directly what are the

List three ways to control preload directly ? What are the advantages of a bonded ultrasonic transducer? What is sometimes cited as a disadvantage? Can torque be used to tighten a 6 in. diameter bolt? If not, why not? Na ...

Finance final exam assignment -answer all questions below

Finance Final Exam Assignment - Answer all questions below. Make sure to show your work. Let me know if you have any question. 1. Suppose the yield on short-term government securities (perceived to be risk-free) is about ...

1 define the following margin account margin requirement

1. Define the following: margin account, margin requirement, and marking to market. 2. Why did futures markets originate in agricultural markets? Would a farmer buy or sell futures contracts? What would a farmer hope to ...

Can someone help provide the steps and solution to this

Can someone help provide the steps and solution to this problem. X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows: Year Project A Project B 1.............. ...

Another consideration in evaluating option strategies is

Another consideration in evaluating option strategies is the effect of transaction costs. Suppose that purchases and sales of an option incur a brokerage commission of 1 percent of the option's value. Purchases and sales ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro