ABC is deciding if credit should be extended to its customers. It has determined that there is a 95% probability that it would collect the full payment from a credit sale in one month. The receivable is financed at an APR of 7.10%. On credit sales of $3,000 per unit, the present value of costs are expected to be 84.50% of the sales price. What is the present value of the expected profit on the sale of each unit? Explain with all steps a.-$16.76 b.-$166.76 c.$126.06 d.$254.90 e.$298.24

Q: A motor corporation sells cars for P dollars, 40% of which must be paid in cash. The unpaid balance…

A: Time value of money- It is based on the concept that money earned today is worth more than similar…

Q: A company is considering extending creait to a new customer. If the customer is approved, credit…

A: In this question breakeven probability of default is applicable on first transaction only because…

Q: A manufacturer currently prices its product at 10 TL per unit. Last year, the manufacturer sold…

A: Accounting Receivable Collection Period - It is an amount of time takes for business to receive…

Q: Accounts recelvable at Majong Food Berhad averaged RM50,000. The total amount of credit sold was…

A: Here, Average Receivables are RM 50,000 Net Credit Sales is RM 500,000 Discount Rate is 3%

Q: Apollo Data Systems is considering a promotional campaign that will increase annual credit sales by…

A: 1. Accounts receivable = Sales/Accounts receivable turnoverAccounts receivable = $600,000/5 = $…

Q: Hail and Sons operates for 240 days in a year. It has been offered credit terms of 4/30 net 90 days.…

A: If company provide credit than it is cost to company so company provide discount to the customers to…

Q: In evaluating a proposal to extend credit , new customers will generate an average of $19000 per day…

A: Net profit = Sales less COGS less administration expense

Q: Tara’s Textiles currently has credit sales of $360 million per year and an average collection period…

A: 1. The computation of the additional profit contribution as follows: The formula used for the…

Q: Kitchen Enterprises is evaluating a proposal to  lengthen its credit period from 30 to 45 days. All…

A: Accounts receivables are those customer accounts to whom business has made credit sales on account…

Q: Show me the solution please, thank you! ABC is deciding to give a cash discount of 1% if the…

A: Solution: In the given question benefit of the policy need to be calculated.   Analysis of benefits…

Q: Use 360 days in a year. Solutions must be complete (including formulas). Present rates in percent…

A: Discount is a selling goods or service below the price of goods. This reduction in price is offered…

Q: A company is offering a 4.9% discount to receivables if they agree to pay within 45 days. The…

A: A credit discount is a discount offered to the borrower of money by the lender of money if the…

Q: ABC is deciding to give a cash discount of 1% if the customers pay on the tenth day. It originally…

A: Cash discounts should not be considered as financial profits when making transactions. Profits…

Q: In evaluating a proposal to extend credit , new customers will generate an average of $11000 per day…

A: Net present value (NPV) is a capital budgeting technique which helps a management in evaluating the…

Q: In evaluating a proposal to extend credit , new customers will generate an average of $13000 per day…

A: Net present value refers to the difference between the present value of all cash inflows of all cash…

Q: Dome Metals has credit sales of $288,000 yearly with credit terms of net 120 days, which is also the…

A: The net income is the income that is received after deducting all the cost and expense from the…

Q: Toshiba Company is considering offering a cash discount to speed up the collection of account…

A: Contribution= Sales - Variable Cost

Q: ompany hasnual credit sales-$10 million Average collection period-60 days t 30. Interest rate=10%.…

A: Companies give discounts to customers so that customers pay early to avoid possible losses on debt…

Q: A seller is considering extending trade credit to an existing customer that buys on cash terms. The…

A: Total units in case of credit = 400 + 10 = 410 Unit sale price = $100 Unit variable cost = $65 r =…

Q: Jewel-Osco evaluated three different pay-bytouch systems that identify customers by a finger scan…

A:

Q: Please answer the attached.

A: The correct answer is : This means that for every $1,000 borrowed, the monthly payment will be…

Q: lifetime value

A: Meaning of customer life time value: Customer life time value is the present value of all future…

Q: An auto dealer has designed a marketing gimmick. They are asking their customers to pay only $119 at…

A: Monthly payment can be calculated with the help of below expression:

Q: BA collects its receivables after 25 days on the average, so that they amount to P75,000. A proposal…

A: Account receivable are payments due to the customers and they are yet to be received and amount of…

Q: Wontaby Ltd. is extending its credit terms from 30 to 45 days. Sales are expected to increase from…

A: The additional financial requirement will be multiplied by the cost of acquiring additional funds…

Q: Global Services is considering a promotional campaign that will increase annual credit sales by…

A: The formula used to determine the investments is as follows:Investments = Sales / Respective…

Q: %, collections within the discount period is 40% and the average age will be 22 days. The variable…

A: The costs decline significantly with experience due to the learning curve phenomenon and efficiency.…

Q: A commercial bill with a face value of $50 000 has a current price of $49,291. This bill is trading…

A: Maturity refers to a period at which the bills or bonds retire. This is the period to which the…

Q: A company currently sell goods of Tk. 6,00,000 with a terms of net 30 days. Its average collection…

A: Accounts receivable is the amount of goods sold on credit which is not yet paid. Accounts receivable…

Q: Quantitative Problem: Adams Manufacturing Inc. buys $11 million of materials (net of discounts) on…

A: 1) 2/10 net 50 means the company gets a 2% discount if they pay within 10 days, otherwise the whole…

Q: The sales director of ABC Corp suggest the following credit terms. He estimated the following:…

A: Credit terms are those terms which are used for providing credit to customers. These credit terms…

Q: Assume all sales are one-time credit sales with a probability of collection of 96 percent. The…

A: Variables in the question:Probability of collection=96%Variable cost per unit=$1.67Sales price per…

Q: . Compute the accounts receivable collection costs and production and selling costs and then add the…

A: I solved upto Part g related to same question  I answered previously. Please give positive rating.

Q: A department store has it’s own credit card facilities, for which it charges interest at a rate of…

A: Internal rate of return would be considered as the rate at which net present value of the project is…

Q: What is the net benefit (in rate or percent) of paying on the 35th day instead of obtained a loan…

A: Credit term refers to a method used by the firms to encourage buyer or debtor to pay the amount of…

Q: (Cost of factoring) MDM Inc. is considering factoring its receivables. The firm has credit salos of…

A: Factoring Factoring is referred to as the financial transaction in which accounts receivable are…

Q: A major credit card company is launching a referral program, which gives an existing customer $50…

A: Annual Increased Profit - It is an amount which is available after set off all the variable and…

Q: Your firm needs to purchase 1,200 traffic cones from a supplier. One supplier demands a payment of…

A: Present value is an estimate of the present value of future cash values ​​that may be received at a…

Q: CA Inc. assumes new customers will default 15 percent of the time but if they don't default, they…

A: NPV = (P-V)*(1-PROB OF DEFAULT)/(R) - V   The variable cost  =  V Credit price  =  P…

Q: How much would XYZ save each year by improving its receivables process by one day?

A: To calculate the savings, we first need to find out the daily credit sales and then calculate the…

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.