company has annual credit sales of €10 million, and a cost of capital of 7%. At present the company's debtors take on average 45 days to pay for goods bought on credit. The company is considering a discount scheme which it estimates would reduce the period taken by customers to 25 days.   Based on the limited i

Q: . If the tax rate is 25 percent, what is the value of the firm? (Do not round intermediate…

A: Firm Value: It represents the sum of all the creditor's claims & shareholders. It can be…

Q: The firm's average accounts receivable balance is P2.5 million, and they are financed by a bank loan…

A: In the given question, the annual savings in interest cost will be compared with the annual cost of…

Q: nsider the operations of a manufacturing company that operates 340 days a year. On entory. All its…

A: Given information : Operational time = 340 days Average time for selling = 55 days Mark up = 12%…

Q: Suppose that a bank has $10 billion of one-year loans and $30 billion of five-year loans. These are…

A: a) Equity MultiplierThe equity multiplier is given by:= 1 + debt-equity ratio= 1 + 0.80= 1.80b)…

Q: A Firm has two alternatives: a. to raise a loan of 100,000 €, due in 3 months, at 10% p.a.…

A: a. loan amount = €100,000  r=10% p.a =10%4=2.5% t=3 months=312 A=p×1+rt=100,000×1+2.5%×312=100625

Q: The Karson transport company currently has net operating income of $495,000 and pays interest…

A: Times interest earned ratio = operating income/interest expense

Q: Suncoast Boats Inc. estimates that because of seasonal nature of its business, it will borrow…

A: Loan is a contract between two parties the lender and the borrower of the finance. This contract of…

Q: By using a lock box system, a firm is able to reduce its float by 3 days. Given an annual interest…

A: A lockbox in float reduction refers to a specialized bank account used for collecting and processing…

Q: expected to double the current 1.5 percent level. The price per unit is P4,250, the variable cost…

A: Amount of bad debts before the change in credit standard (Present) - Unit Sales= 3,000 Sales per…

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: sells tyres on credit only. The management of the company estimated that it could increase sales by…

A: Collection period is period required to receive payments from customers that are due to customers…

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: 1) Wontaby Ltd. is extending its credit terms from 45 to 60 days. Sales are expected to increase…

A: Question OneBecause of increase in the credit terms, company's accounts receivables increases where…

Q: Gallant Sdn. Bhd., offers a credit period of 4 weeks.  The price and cost per unit of its product…

A: Since you have posted more than 3 sub-parts, we will provide the solution only to the first three…

Q: 4. Sovereign-Tea Company projected to make even monthly cash payments of P150,000 during the year.…

A: Total relevant cost = Holding cost +Transaction cost Formula for Holding cost= k(C/2) and formula…

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: Tyres Ltd sells tyres on credit only. The management of the company estimated that it could increase…

A: Credit period, also known as payment terms or credit terms, refers to the duration of time that a…

Q: A firm currently sells $500,000 annually with 3% bad debt losses. Two alternative policies are…

A: The situation is based on comparative analysis of incremental revenue and incremental costs. If an…

Q: 14. A company plans to tighten its credit policy. The new policy will decrease the average number of…

A: Receivables turnover ratio shows the efficiency of the company in extending credit sales as well as…

Q: The Milton Company currently purchases an average of $25,000 per day in raw materials on credit…

A: 1. Calculate the current level of trade credit:

Q: Dome Metals has credit sales of $198,000 yearly with credit terms of net 120 days, which is also the…

A: Increase in profit = Current sales* increase in sales%= 198,000*20%*25% = 9,900Old accounts…

Q: A company plans to tighten its credit policy. The new policy will decrease the average number of…

A: Credit Policy is very crucial for company's working cycle. It should be optimal so that the…

Q: he Blue Company has under study a new credit policy that they believe will increase annual sales…

A: Company gives credits to customers to increase sales and profits but due to this there is increase…

Q: Your company wants to buy a new piece of machinery for $2.3 million. You will pay for 15% of the…

A: Weighted Average Cost of Capital: When a firm's weighted average cost of capital (WACC) is…

Q: NATO Co.’s business is booming, and it needs to raise more capital.  The company purchases supplies…

A: Here, Discount Rate is 1% Days of Discount is 10 days Days of Payment without adverse effect is 30…

Q: Company A carries out its sales with a net maturity of 45 days, and is considering increasing this…

A: To find the answer of the first question, we will first have to find the increase in sales. To find…

Q: Reed plc is considering how to improve its debtor collection policy. The following information is…

A: i.   Current New Sales £912,000 £872000 (912,000-40000) (-) VC (80%, Since contribution is…

Q: Marpor Industries has no debt and expects to generate free cash flows of $16.82 million each year.…

A: b. Estimate​ Marpor's value with the new leverage.Value of firm with debt = (15,320,000/0.126 ) +…

Q: If real gets a cash infusion of P1 million each time it needs cash, what are the total costs per…

A: As per Bartleby guidelines, in case of multi-part questions, we are only allowed to answer the first…

Q: Meyer & Co. expects its EBIT to be $115,000 every year forever. The firm can borrow at 7…

A: EBIT = $115,000Cost of Equity = 13% or 0.13Tax Rate = 24% or 0.24 Calculation of the Value of the…

Q: TEME is a manufacturer of toy construction equipment. If it pays out all of its earnings as…

A: The company's current earnings: 0.3 per quarter so the year long earnings will be: 0.3 x 4 = 1.20 If…

Q: Udar limited is considering a change in its credit terms from 2/10 net 30 to 3/10 net 45, change is…

A: Credit terms means the terms and conditions of an enterprise through which it sells the goods on…

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: he Milton Company currently purchases an average of $18,000 per day in raw materials on credit terms…

A: When a company purchases goods on credit, the seller specifies the terms of payment on the invoice.…

Q: Suppose that a bank has $10 billion of one-year loans and $30 billion of five-year loans. These are…

A: The bank has a balance of $10 billion in one-year loans and $30 billion in five-year loans, as well…

Q: mine plc has annual credut of k15m and allows 90 days credit. it is consideringba 2% discount…

A: Calculation of Current Interest Cost Note: Since the customers pay back after 90 days, amount due…

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.