MLX has annual sales of $320 million per year and has calculated the collection float to be 12 days. If MLX is currently paying 9.35% on its line of credit, what amount of interest expense could be saved if the collection float is reduced by 3 days? (Assume 365 days per year.)

MLX has annual sales of $320 million per year and has calculated the collection float to be 12 days. If MLX is currently paying 9.35% on its line of credit, what amount of interest expense could be saved if the collection float is reduced by 3 days? (Assume 365 days per year.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: What's the rate of return you would earn if you paid $2,880 for a perpetuity that pays $65 per year?…

A: Perpetuity is a type of payment at the regular intervals which is likely to continue forever. It is…

Q: Last year, Cayman Corporation had sales of $27 million, total variable costs of $13 million, and…

A: Variable costs are costs which changes along with change in activity level. Contribution margin is…

Q: Two payments of $5,000 are to be received four and eight months from now. a. What is the combined…

A: Present value is the equivalent today of the future payments that are going to be received in the…

Q: Income from sales of certain hardened steel connectors was P400,000 in the ﬁrst quarter, P410,000 in…

A: Present Value: The present value is the value of cash flow stream or the fixed lump sum amount at…

Q: If $4,000 is invested at 7% compounded annually. How long will it take for it to grow to $6,000,…

A: To solve the question, we need to use the concept of time value of money. According to the concept…

Q: A firm is scheduled to receive payment of $32,000 in 1 year. What is the present value of this…

A: To calculate the present value of payment that will receive after 1 year we will use the below…

Q: A firm is scheduled to receive payment of $32,000 in 2 years. What is the present value of this…

A: To calculate the present value we will use the below formula Present value = FV/[1+(r/m)]n*m Where…

Q: A firm is scheduled to receive payment of $68,000 in 2 years. What is the present value of this…

A: Present value refers to the current valuation for a future sum. Investors determine the present…

Q: What would be the payback period if the store's initial investment was 25 million pesos, their…

A: Pay back period one of the method of capital budgeting and this is time required to recover the…

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: To increase its sales, a wholesale company offers its customers a promotion that consists of paying…

A: Company offers its customers a promotion that consists of paying only 30% of the value of the…

Q: If interest is compounded at 6.5% per year, how long will it take for $50,000 to accumulate to…

A: Present value = $50,000 Future value = $88,600 Interest rate = 6.5% Let time taken = n years

Q: Microsoft corporation wants to reduce its interest rate exposure and will need to borrow $1,000,000…

A: FRA: It is an OTC contract between the two parties in which an interest rate is paid at a…

Q: Osborne Supply Company has credit sales of $2M per year. Collections average $8000 per day. Assume…

A: In the given problem, the internal processing time is reduced by 1 day, as a result of which the…

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: Fourteen years ago, the U.S. Aluminum Corporation borrowed $6.5 million. Since then, cumulative…

A: a) Computation of effective purchasing power:

Q: A firm has borrowed $5,000,000 for 5 years at 10% per year compound interest. The firm will make no…

A: This is then of future value. Future value is the value of current cash at the future date…

Q: What is the NPV of the lockbox system? Multiple Choice O $156,727 $368,654 $274,208 $421,730…

A: Net present value is used to determine a project's or investment's profitability. It is determined…

Q: A firm is scheduled to receive payment of $32,000 in 2 years. What is the present value of this…

A: Present value of future cash flow can be calculated as follows: = Future Value/ (1 + rate)^number of…

Q: If an investment of $45,000 is earning an interest rate of 4.00%, compounded annually, then it will…

A: The number of years that will take to reach $53,686.19 at given interest rate can be calculated…

Q: quarterly

A: Introduction: The amount that would be in the account at the end of a particular time period is…

Q: With a margin of 120 million of a base year that grows at 10%, some commissions collected of 205…

A: Calculate the margin in the following year (Margin T+1) by multiplying the margin in the base year…

Q: An investment of P40,000 has a revenue of X pesos at the end of the first and second year. Given a…

A: When net present worth is zero that means present value of cash flow is equal to initial investment…

Q: Choam Inc. owes $16,100 that is due in 1 year. Instead of paying then, Choam is going to make two…

A: Equal payments refer to a method of repaying a loan or debt in which the borrower makes fixed…

Q: A 60-day $100,000 T-bill was bought for $99,500. What rate of return will be realized if the T-bill…

A: Given: Face value = $100,000 Present value = $99,500 Days = 60

Q: ABC International can borrow $4,000,000 at SOFR plus a lending margin of 0.65 percent per annum on a…

A: Amount borrowed = $4,000,000Lending rate = SOFR + 0.65%Three month SOFR is currently 5.5 %SOFR for…

Q: angel co. has P500,000 in receivable that carries a 30-day credit term, 2% factor’s fee, 5% holdback…

A: Factoring is a system or arrangement in which the company sells its accounts receivables to a…

Q: Microsoft corporation wants to reduce its interest rate exposure and will need to borrow $1,000,000…

A: Forward rate agreement: It is an agreement between the parties in which the rate of return is…

Q: It is December 31. Last year, Galaxy Corporation had sales of $80,000,000, and it forecasts that…

A: According to bartleby guidelines , if question involves multiple sub parts , then 1st sub 3 parts…

Q: 1. Problem 15.02 (Receivables Investment) eBook Leyton Lumber Company has sales of $10 million per…

A: Days sales outstanding says that in how much time debtors of the company will pay their amount

Q: TR bank has agreed to provide a lockbox system to Sexy Inc. for a fixed fee of P50, 000 per year and…

A: Given, Fixed fee = P50,000 Float decrease by = 2 days Interest rate = 6% Payments per day = 50…

Q: How much would XYZ save each year by improving its receivables process by one day?

A: To calculate the savings, we first need to find out the daily credit sales and then calculate the…

Q: How much would a company have to invest now in order to sufficiently provide for annual payments of…

A: Solution:- Calculation of the How much would a company have to invest as follows under:-

Concept explainers

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.

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

WORKING

VIEW

ANSWER

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Accounts receivable are P30,000 and the turnover rate is 24 times a year. As turnover rate of 18 times in one year is desired to increase by 25 %. The estimated accounts receivable to be maintained would be P
A DSL company has made an equipment investment of $40 million with the expectation that it will be recovered in 10 years. The company has a MARR based on a real rate of return of 12% per year. If inflation is 7% per year, how much must the company make each year (a) in constant-value dollars, and (b) in future dollars, to meet its expectation?
XYZ Co is thinking about expanding. They have provided the following information: Expect an extra $2.5million in sales 18% of the sales will be uncollectible Collection Costs are 3% on all new sales Production Costs 70% of sales Selling expenses are 11% of sales Opportunity Cost of 22% (before taxes) Turn Receivables 4 times per year Should XYZ Co expand?
A company receives 13.78% per year from accounts. They are considering a project that will force them to wait 9 years, before then can consistently deposit profits of $95,497 every year for 15 years. How much is this project worth to them now?
MTR bank has agreed to provide a lockbox system to Sexy Inc. for a fixed fee of P50, 000 per year and a rate of P.50 for each payment processed by the bank. On average, Sexy Inc. receives 50 payments per day, each averaging P20,000. With the lockbox system, the company's collection float will decrease by two days. The annual interest rate on money market securities is 6%. If Sexy Inc. makes use of the lockbox system, what would be the net benefit to the company? Use 365 days in a year. C. P60,875 D. P120,000 A. P50,000 B. P59,125
If RM70,000 is deposited now into a saving accounts that earn 8% per year, what uniform annual amount could be withdrawn at the end of each year for 10 years. Assume nothing would be left in the account after the 10 withdrawals.
Beckham Corp. is considering an investment which should be worth $600,000 10 years from now when it earns 7% compounded annually.Question: Rounding to the nearest whole dollar, what is the most Beckham should pay today for this investment?