Lockbox system Eagle Industries feels that a lockbox system can shorten its accounts receivable collection period by 5 days. Credit sales are $3,200,000 per year, billed on a continuous basis. The firm has otherequally risky investments with a return of 15%. The cost of the lockbox system is $9,000 per year. (Note: Assume a 365-day year.)a. What amount of cash will be made available for other uses under the lockbox system?b. What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system?a. The amount of cash that will be made available for other uses under the lockbox system is $(Round to the nearest dollar.)

A lock box system is a service that banks provide to enterprises to gather payments from their…

Answered: Lockbox system Eagle Industries feels…

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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Similar questions

Suppose that LilyMac Photography has annual sales of $233,000, cost of goods sold of $168,000, average inventories of $4,800, average accounts receivable of $25,600, and an average accounts payable balance of $7,300.Assuming that all of LilyMac’s sales are on credit, what will be the firm’s cash cycle? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $9.5 million today and $5.5 million in one year. The government will pay you $21.7 million in one year upon the building's completion. Suppose the interest rate is 10.3%. a. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today? www. a. What is the NPV of this opportunity? The NPV of the proposal is $ million. (Round to two decimal places.) b. How can your firm turn this NPV into cash today? (Select the best choice below.) O A. The firm can borrow $19.67 million today and pay it back with 10.3% interest using the $21.7 million it will receive from the government. B. The firm can borrow $15.0 million today and pay it back with 10.3% interest using the $21.7 million it will receive from the government. O C. The firm can borrow $15.0 million today and pay it back with 10.3% interest using the $19.67 million it will…
Hollywood Shoes would like to maintain their cash account at a minimum level of $67,000, but expect the standard deviation in net daily cash flows to be $5,700; the effective annual rate on marketable securities to be 6.50 percent per year; and the trading cost per sale or purchase of marketable securities to be $270 per transaction. What will be their optimal cash return point? (Round your answer to 2 decimal places.)
(Present value of complex cash flows) How much do you have to deposit today so that beginning 11 years from now you can withdraw $13,000 a year for the next 7 years (periods 11 through 17) plus an additional amount of $26,000 in the last year (period 17)? Assume an interest rate of 7 percent. The amount of money you have to deposit today is (Round to the nearest cent.) www
Imagineering, Inc., is considering an investment in CAD-CAM compatible design software with the cash flow profile shown in the table below. Imagineering’s MARR is 18 %/year.What is the present worth of this investment (in millions)? $enter a dollar amount Carry all interim calculations to 2 decimal places and round your answer to the nearest million. The tolerance is ±0.05. EOY 0 1 2 3 4 5 6 7 Cash Flows (M$) $12 $1 $5 $2 $5 $5 $2 $5
Home Security Systems is analyzing the purchase of manufacturing equipment that will cost $56,000. The annual cash inflows for the next three years will be: Year 1 2 3 Cash Flow $ 28,000 26,000 21,000 Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the financial calculator method. a. Determine the internal rate of return. Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Internal rate of return %
[1]- If a person deposits $1000 per quarter into an account at an interest rate of 12% persemiannually.a) Draw cash flow diagram, CFD?b) How much will be in the account at the end of 6 years? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
A new company estimates that by investing in a new process, it will increase its sales by $2.5 million one year from now and a further $1 million one and half year from now. Assume interest rate of 16% per year, compounded semiannually. Please write formula, use compound interest table for extracting factors, show your solution step by step. a) Draw cash flow diagram b) What is the maximum amount the company can afford to spend now on the new process in order to break even? Compare PP and CP and use first method (determine effective rate per compounding period).
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The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next four years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 $100,000 $20,000 $330,000 $450,000 The Cro of the company believes that an appropriate annual interest rate on this investment is 4%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar? O $1,650,000 O 2,000,000 O $792,676 O $450,000
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