FIN490 Week 2 Discussion 2

Your business plan for your proposed start-up firm envisions first-year revenues of $180,000, fixed costs of $60,000, and variable costs equal to one-third of revenue. a. What are expected profits based on these expectations? (Round your answer to nearest whole number.) Expected profit b. What is the degree of operating leverage based on the estimate of fixed costs and expected profits? (Round your answer to 2 decimal places.) Degree of operating leverage c. If sales are 10% below expectation, what will be the percentage decrease in profits? (Round your answer to nearest whole number.) Decrease in profits %

Your company is considering granting credit to a new customer. The variable cost per unit is RO 20, the current price is RO 25, and the monthly required return is 2.5%. What is the break - even probability of default if we assume a repeat business? Interpret.

Alderson Metals is compiling a cash balance projection by quarter for next year. Which one of the following adjustments to this projection will decrease the cumulative surplus?  A.  Reducing payroll costs from its current projection amount   B.  Decreasing the accounts receivable period by changing the firm's credit policy effective the first of next year   C.  Receiving more favorable credit terms from the firm's suppliers   D.  Increasing the dividend per share on the firm's outstanding common stock   E.  Refinancing the firm's long-term debt at a lower interest rate

Please do not give solution in image format thanku Now change the Assumed Compound Supply Growth to 0.42%. What does this change do to the Sample Inn’s projected occupancy and to the market projected occupancy? Given these changes, how would you characterize the relationship between the rate of supply growth and occupancy projections?

Calculating the margin of safety (MOS) measure will help a firm answer which of the following questions? How much will operating profit (πB) change if sales change? Are we using our debt wisely? Will we break even? How much revenue can we lose before we drop below the breakeven point? How much operating profit (πB) will we earn?

Repeat the Spuds and Suds Income Statement example from Chapter 7 with the following assumptions: price per unit and fixed costs are expected to increase by an average annual rate of inflation of 2%. Also assume that variable costs as a percent of sales will remain constant at 65%. Finally, suppose that Spuds and Suds is a firm in the early stage of business, and that unit sales are projected to grow at a rate of 20%, 15%, 10% and 5% for 2020-2024 respectively. a) Create an income statement using the assumptions explained above. (Analysis 4 pts) b) Calculate the operating break-even point in both units and dollars. (Analysis 4 pts) c) How many units would Spuds and Suds need to sell in order to achieve earnings, before interest and taxes of $900,000? (Identify and Access Needed Information 4 pts) d) Calculate the degree of operating, financial, and combined leverage for each year. (Use Information Effectively to Accomplish a Specific Purpose 4 pts) e) Create a chart that shows how the…

If we hold all other factors the same, an increase in interest rates will: a. Decrease the present value of a stream of constant payments we expect to receive. b. Increase the present value of a stream of constant payments we expect to receive. c. Decrease the interest revenue that a company will earn on its funds that it holds in its interest-bearing checking account. d. No impact on how much a company should be willing to pay for factory equipment that is expected to significantly reduce the factory electricity costs.

In this exercise, we develop a model for the growth rate G, in thousands of dollars per year, in sales of a product as a function of the sales level s, in thousands of dollars.† The model assumes that there is a limit to the total amount of sales that can be attained. In this situation, we use the term unattained sales for the difference between this limit and the current sales level. For example, if we expect sales to grow to 4 thousand dollars in the long run, then 4 − s gives the unattained sales. The model states that the growth rate G is proportional to the product of the sales level s and the unattained sales. Assume that the constant of proportionality is 0.8 and that the sales grow to 2 thousand dollars in the long run. (a) Find a formula for unattained sales.(b) Write an equation that shows the proportionality relation for G.G =

Above information is correct need the following on same problem:Thanks! What is the economic rate of return?(as a %) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Now compute the steady−state book rate of return (ROI) for a mature company producing polyzone. Assume no growth and competitive spreads. (as a %)(Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

The credit terms of a firm currently is “net 30”. It is considering to change it to “net 60”. This will have the effect of increase in firm’s sales. As the firm will not relax credit standards, the bad debt losses are expected to remain at same percentage, that is, 3% of sales. Incremental production, selling and collection costs are 80% of sales and expected to remain constant over the range of anticipated sales increases. The relevant opportunity cost for receivables is 15%. Current credit sales are Rs. 300 crore and current level of receivables is Rs 30 crore. If credit terms are changed, the current sale is expected to change to Rs 360 crore and firm’s receivables level will also increase. The firm’s financial manager estimates that new level of credit terms will cause firm’s collection period to increase by 30 days. Determine the present collection period and the collection period after the proposed change in credit terms. What level of receivables is implied by the new…

Price Mart is considering outsourcing its billing operations. A consultant estimates that outsourcing should result in cash savings of $9,500 the first year, $15.500 for the next two years, and $18,500 for the next two years. Interest is at 10%. Assume cash flows occur at the end of the year. Required: Calculate the total present value of the cash flows. Note: Use tables, Excel, or a financial calculator. Do not round intermediate calculations. Round your final answer to nearest whole dollar. (FV of $1. PV of $1. FVA of $1. PVA of $1, EVAD of $1 and PVAD of $1) Total present value of the cash flows

True or False The cash conversion cycle is the sum of the inventory conversion period, the receivables collection period, and the days payables outstanding. * True False The best and most comprehensive picture of a firm's liquidity position is obtained by examining its cash budget. * True False A firm's goal should be to lengthen the cash conversion cycle since shorter cash conversion cycles leads firms to increase their dependence on costly external financing. * True False The larger the investment a firm makes in its current assets, the higher its carrying costs will be. * True False Other things held constant, if a firm "stretches" (i.e., delays paying) its accounts payable, this will lengthen its cash conversion cycle (CCC). * True False Short-term financial policies that are flexible with regard to current assets includes keeping large balance of short-term debt. * True False Costs that fall with increases in the level of investment in current assets are called shortage costs. *…

1.How much is the average daily collections? 2. How much is the increase in the average cash balance due to the three-day reduction in the collection float if the new system is adopted? 3. How much is the gross benefit (annual return on the investment of increase in the average cash balance) of the lockbox system? 4. Should the company make the investment and adopt the lockbox system? ○Yes or No?

Can you answer this accounting question without use ai?

Consider an economy with two types of companies, S and I. The profits of companies S always move together, but the profits of companies I move independently of each other. For both firms, there is a 70% probability that the firm's return is 30%, and a 30% probability that the return is -30%. The standard deviation of an individual company's return is closest to the value: Choose one: A.23.0% B.5.25% C.15.0% D.10.0%        Only typed answer

Problem 3. Regent Rug Repair Company is trying to decide whether it should relax its credit standards. The firm repairs  rugs per year at an average price of  each. Bad debt expenses are  of sales, the average collection period is  days, and the variable cost per unit is . Regent expects that if it does relax its credit standards, the average collection period will increase to  days and that bad debts will increase to  of sales. Sales will increase by  repairs per year. If the firm has a required rate of return on equal-risk investments of , what recommendation would you give the firm? Use your analysis to justify your answer (use a 365-day year)

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An increase in a firm's expected growth rate would cause its required rate of return to O a. fluctuate less than before. O b. increase. c. decrease. d. possibly increase, possibly decrease, or possibly remain constant. O e. fluctuate more than before.

The lower the MARR (minimum attractive rate of return), the higher the price that a company should be willing to pay for equipment that reduces annual operating expenses. A) True (B) False