Discuss this comment by a small-town bank president:“Budgeting is a waste of time. I’ve been running this business for 40 years. I don’t need to plan.”
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Discuss this comment by a small-town bank president:
“Budgeting is a waste of time. I’ve been running this business for 40 years. I don’t need to plan.”
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- Carson Company is a large manufacturing firm in California that was created 20 years ago by the Carson family. It was initially financed with an equity investment by the Carson family and ten other individuals. Over time, Carson Company has obtained substantial loans from finance companies and commercial banks. The interest rates on those loans are tied to market interest rates and are adjusted every six months. Thus, Carson’s cost of obtaining funds is sensitive to interest rate movements. The company has a credit line with a bank in case it suddenly needs to obtain funds for a temporary period. It has purchased Treasury securities that it could sell if it experiences any liquidity problems. Carson Company has assets valued at approximately $50 million and generates sales of nearly $100 million per year. Some of its growth is attributed to its acquisitions of other firms. Because it expects the economy to be strong in the future, Carson plans to grow by expanding its business and…Use this information for questions 9 to 12: You are put in charge of starting a credit card business for a bank. This is what you've learned so far: Your boss wants you to get to $10 million in outstanding loans within a year. It costs you $75,000 a year to employ a risk officer to approve or deny loan applications. You need two loan collectors, paid $50,000 each. Your salary is $125,000 a year. The bank is paying depositors 1%, in line with the inflation rate. You can change the credit card interest rate any time you want. You expect 6% of your customers to default each year. 9. You need to charge your credit card customers % to cover the costs of running the business. 10. Yes No. You need to charge your customers to cover the risk of a rise in future inflation. 11. You expect your dollar losses for customer defaults to be $ a year. 12. The minimum amount you need to charge the credit card customers per year to break even is: (A) (B) 8% 10% (C) (D) 12% 15%You are the owner of four Taco Bell restaurant locations. You have a business loan with Citizens Bank taken out 60 days ago that is due in 90 days. The amount of the loan is $70,000, and the rate is 9.5% using ordinary interest. You currently have some excess cash: $45,000. Due to situations beyond your control, you, as the owner, must make an immediate business decision now to pursue only one of these two choices:1) sending all of the $45,000 to Citizens Bank as a partial payment on your loan, or2) using the $45,000 to purchase serving supplies such as food containers, cups, and plastic dinnerware for your inventory. This is the last day to take advantage of the opportunity to save some money due to a special discount price that is "10% off" the normal cost of $45,000 for these items. Consider these calculations: (A) How much interest (in $) will you save on this loan if you make the partial payment and don't purchase the additional serving supplies? (Round your answer to two…
- 2) The council members of a small town have decided that the earth levee that protects the town flooding should be rebuilt and strengthened. The town engineer estimates that the cost of the work at the end of the first year will be $85,000. He estimates that in subsequent years the annual repair costs will decline by $10,000 making the second-year cost $75,000; the third year $65,000, and so forth. The council members want to know what the equivalent present cost is for the first 5 years of repair work if annual effective interest is 4%.I am just confused about how to solve this problem because it was never addressed in class so any help would be really beneficial, thank you! The question is based on the orginial information stated in the image. Now, Assume that you start out on January 1 of 2024 with $35,000.00 cash in the bank, and a 0 operating loan balance and you plant 1000 acres of No-Till soybeans (all on cash rented land). Assume your enterprise budget projections are correct. Develop a monthly cash flow budget from January of 2024 through December of 2024 to track the timing of cash inflows and outflows, and the resulting required operating loan balances at the end of each month. Use the “OSU Cash Flow Blank Template available on the class website for this exercise. Assume that you need to maintain a $5,000.00 balance in your cash account. Also assume that you have other sources of income to fund family living, so you do not actually take the operator labor charge out of the wheat enterprise. Assume…Its a standard practice question I am struggling with
- Please solve with Explanation and Do not Give solution in images formatYou are the owner of four Taco Bell restaurant locations. You have a business loan with Citizens Bank taken out 60 days ago that is due in 90 days. The amount of the loan is $50,000, and the rate is 9.5% using ordinary interest. You currently have some excess cash: $35,000. Due to situations beyond your control, you, as the owner, must make an immediate business decision now to pursue only one of these two choices:1) sending all of the $35,000 to Citizens Bank as a partial payment on your loan, or2) using the $35,000 to purchase serving supplies such as food containers, cups, and plastic dinnerware for your inventory. This is the last day to take advantage of the opportunity to save some money due to a special discount price that is "10% off" the normal cost of $35,000 for these items. Consider these calculations: (a) How much interest (in $) will you save on this loan if you make the partial payment and don't purchase the additional serving supplies? (Round your answer to two…An officer for a large construction company is feeling nervous. The anxiety is caused by a new excavator just released onto the market. The new excavator makes the one purchased by the company a year ago obsolete. As a result, the market value for the company’s excavator has dropped significantly, from $600,000 a year ago to $50,000 now. In ten years, it would be worth only $3,000. The new excavator costs only $950,000 and would increase operating revenues by $90,000 annually. The new equipment has a ten-year life and expected salvage value of $175,000. The tax rate is 35%, the CCA rate, 25% for both excavators, and the required rate of return for the company is 14%. What is the NPV of the new excavator?
- The dean of the School of Fine Arts is trying to decide whether to purchase a copy machine to place in the lobby of the building. The machine would add to student convenience, but the dean feels compelled to earn an 8 percent return on the investment of funds. Estimates of cash inflows from copy machines that have been placed in other university buildings indicate that the copy machine would probably produce incremental cash inflows of approximately $12,000 per year. The machine is expected to have a three-year useful life with a zero salvage value. (Use appropriate factor(s) from the tables provided.) Required a. Use Present Value Appendix PV of $1. to determine the maximum amount of cash the dean should be willing to pay for a copy machine. (Round your intermediate calculations and final answer to 2 decimal places.) b. Use Present Value Appendix PVA of $1. to determine the maximum amount of cash the dean should be willing to pay for a copy machine. (Round your final answer to 2…After you prepared the operating budget for the first quarter, Lockden learned that one of the two molding machines used by the company needs a major overhaul soon. Since the company is considering cost reduction strategies in response to the economic uncertainty, this news was unfavorable. But Lockden realized that the overhaul is important and has decided to do the overhaul during the first quarter of 2020. The overhaul will cost US$100,000,7 and the machine will not be operational during the overhaul (i.e., the entire duration of the first quarter). The company is exploring the viability of the following options to handle this operational challenge: Option 1: Lockitt, Inc. will run the functional molding machine two shifts per day, instead of one. Since LB075 labor is paid hourly, this proposal will not change the labor hours required. But the company must pay a higher wage rate to the employees in the second shift, causing the average LB075 rate to increase to $45 per hour.…I’m not sure we should lay out $265,000 for that automated welding machine,” said Jim Alder, president of the Superior Equipment Company. “It would cost us $78,000 for software and installation, and another $40,800 per year just to maintain. In addition, the manufacturer admits it would cost $41,000 more at the end of three years to replace worn-out parts.” “I admit it’s a lot of money,” said Franci Rogers, the controller. “But you know the turnover problem we’ve had with the welding crew. This machine would replace six welders at a cost savings of $108,000 per year. And we would save another $6,900 per year in reduced material waste. When you figure the automated welder would last six years, I’m sure the return would be greater than our 19% required rate of return.” “I’m still not convinced,” countered Mr. Alder. “We can only get $14,000 scrap value for our old welding equipment if we sell it now, and in six years the new machine will only be worth $24,000 for parts.” Click here to…