BioTron Medical, Inc. Brent Bush, CFO of a medical device distributor, BioTron Medical, Ic., was approached by a Japanese customer, Numata, with a proposal to pay cash (in yen) for its typical orders of ¥12,500,000 every other month if it were given a 4.2% discount. Numata's current terms are 30 days with no discounts. Using the quotes and estimated cost of capital for BioTron Medical in the popup window, E, Bush will compare the proposal with covering yen payments with forward contracts. Should Brent Bush accept Numata's proposal? Assume a 360-day financial year. How much in U.S. dollars will BioTron Medical receive with the discount? (Round to the nearest cent.) Data table Spot rate: ¥111.86/S ¥111.46/$ ¥110.86/$ 30-day forward rate: 90-day forward rate: 180-day forward rate: Numata's WACC ¥110.46/$ 8.88% BioTron's WACC 9.45% Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet.

BioTron Medical, Inc. Brent Bush, CFO of a medical device distributor, BioTron Medical, Ic., was approached by a Japanese customer, Numata, with a proposal to pay cash (in yen) for its typical orders of ¥12,500,000 every other month if it were given a 4.2% discount. Numata's current terms are 30 days with no discounts. Using the quotes and estimated cost of capital for BioTron Medical in the popup window, E, Bush will compare the proposal with covering yen payments with forward contracts. Should Brent Bush accept Numata's proposal? Assume a 360-day financial year. How much in U.S. dollars will BioTron Medical receive with the discount? (Round to the nearest cent.) Data table Spot rate: ¥111.86/S ¥111.46/$ ¥110.86/$ 30-day forward rate: 90-day forward rate: 180-day forward rate: Numata's WACC ¥110.46/$ 8.88% BioTron's WACC 9.45% Click on the icon located on the top-right corner of the data table in order to copy its contents into a spreadsheet.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 21P

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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.

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