Fitzgerald Corporation currently has an all-cash credit policy. It is considering making achange in the credit policy by going to terms of net 30 days. The required return is .9percent per month.Price per unitCurrent Policy$ 245New PolicyCost per unit$ 179$ 250$184Unit sales per month1,7401,790Calculate the NPV of the decision to change credit policies. (A negative answer shouldbe indicated by a minus sign. Do not round intermediate calculations and round youranswer to 2 decimal places, e.g., 32.16.)NPV

Net present value is the metric that takes into account the time value of money in evaluating the…

Fitzgerald Corporation currently has an all-cash credit policy. It is considering making a change in the credit policy by going to terms of net 30 days. The required return is .9 percent per month. Price per unit Current Policy $245 New Policy $ 250 Cost per unit $ 184 Unit sales per month $ 179 1,740 1,790 Calculate the NPV of the decision to change credit policies. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV

Fitzgerald Corporation currently has an all-cash credit policy. It is considering making a change in the credit policy by going to terms of net 30 days. The required return is .9 percent per month. Price per unit Current Policy $245 New Policy $ 250 Cost per unit $ 184 Unit sales per month $ 179 1,740 1,790 Calculate the NPV of the decision to change credit policies. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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ebbing eflopse bank and trust offers an APR of 41.09 percent compounded quarterlt on its credit cards. Vanishing vortex regional Bank offers an APR OF 39.78 percent compounded daily on jts credit cards. A. what is rhe effective annual rate for ebbing eclipse bank and trust? B what is the effective annual rate for vanishing vortex bank and trust? C. which bank credit card is better?
es Little Kimi Clothiers can borrow from its bank at 20 percent to take a cash discount. The terms of the cash discount are 3/25 net 85. a. Compute the cost of not taking the cash discount. (Use 365 days in a year. Do not round the intermediate calculations. Round the final answer to 2 decimal places.) Cost of not taking a cash discount b. Should the firm borrow the funds? % 00 Yes O No
Fitzgerald, Incorporated, currently has an all-cash credit policy. It is considering making a change in the credit policy by going to terms of net 30 days. The required return is .67 percent per month. Price per unit Cost per unit Unit sales per month Current New Policy Policy $170 $173 $ 134 $ 137 1,290 1,320 Calculate the NPV of the decision to change credit policies. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV Answer is complete but not entirely correct. $ 646.71
3
Fizzy Animators, Inc. currently makes all sales on credit and offers no cash discount. The firm is considering a 2 percent cash discount for payment within 10 days. The firm's current average collection period is 90 days, sales are currently $1,000,000, variable cost is $600,000 (note the variable cost % is 60%). The firm expects that the change in credit terms will result in an increase in sales to $1,500,000 per year and variable costs will increase to $900,000 per year. Fizzy projects that 80 percent of the sales will take the discount, and the average collection period will drop to 30 days. The firm's required return on equal-risk investments is 10 percent. (Assume a 360-day year.) What is the cost (benefit) of the marginal cash discount? O ($18,000) O $24,000 ($22,000) O $30,000
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Balboa Enterprises currently sells 13,650 units a month for total monthly sales of $272,863.50. The company is considering replacing its current cash only credit policy with a net 30 policy. The variable cost per unit is $11.30 and the monthly interest rate is 1 percent. What is the switch break-even level of sales? 13,492 units 13,525 units 13,600 units 13,968 units 14,069 units
Compute the cost of not taking the following cash discounts. Note: Use a 360-day year. Do not round intermediate calculations. Input your final answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Cost of Lost Discount 22.11% 18.71% 40.51% 157.41% a. 2/11, net 50 b. 2/17, net 50 c. 4/15, net 50 d. 4/19, net 155
Examine the points versus no points chart to respond to the following query: Determine the percentage that the total interest paid will drop from buying no points to three points. To the closest hundredth, round the final response.
a seller has offered credit terms of 2.5/5 net 50 to a customer that has agreed to immediately purchase 500 units at a sales price per unit of $100. variable costs are $65 per unit and involve an immediate cash outflow. the seller has an annual opportunity cost rate of 7.3%. based on this information, what is the present value of the net flows associated with the cash discount terms? is it - 16,201; 26,750; 81,201; 32,500

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