What is the average payment period? If Maverick Industries has a cash cycle of35 days and an operating cycle of 92days, what is its average paymentperiod?a) 57b) 127c) 35d) 92

The formula for the cash cycle is: Cash Cycle = Operating Cycle - Average Payment Period Given:Cash…

Answered: If Maverick Industries has a cash cycle…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2MC

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Question 1 a) A company is due to receive a payment of £500,000 from a customer in 6 months’ time. To smooth its cashflows, the company would prefer to receive the payment immediately, and has agreed to transfer its entitlement to this payment to a third party (a discount house) in return for an immediate payment calculated using a rate of commercial discount of 16% per annum.How much will the immediate payment made by the discount house be?b) An investor puts £5,000 in a savings account that pays 10% simple interest at the end of each year. Compare how much the investor would have after 6 years if the money was:i. Invested for 6 years ii. Invested for 3 years, then immediately reinvested for a further 3 years. c) £250 is invested in a savings account. The nominal rate of interest convertible monthly for the first 3 months is 18% and the nominal rate of interest convertible quarterly for the next 9 months is 20%. How much is in the account at the end of the year?d) Calculate the…
Question 2. A company makes payments continuously at a rate of $200 per year. The payments are made between year 2 and 7. Find the accumulated value of these payments at time 10, using i = 6.5%. Hint: 1419.76
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Use formula for level payment loans: PR = Kv^(n-t+1), where PR = principal repaid, K = payment (suppose K=1)
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If Maverick Industries has a cash cycle of 35 days and an operating cycle of 92 days, what is its average payment period? a) 57 b) 127 c) 35 d) 92