Question 2 A company is considering factoring as a way of managing its trade receivables. It currently has a balance outstanding on trade receivables of R 2 500 000. It has annual sales revenue of R 15 000 000 which occurs evenly throughout the year. Trade receivable are expected to continue at the same level for the next year. The factor will advance 80% of the invoiced sales and will charge interest at a rate of 10% per annum. Required: The interest charge for the next year payable to the factor will be: A. R50 000 B. R200 000 C. R300 000 D. R1 200 000

Question 2 A company is considering factoring as a way of managing its trade receivables. It currently has a balance outstanding on trade receivables of R 2 500 000. It has annual sales revenue of R 15 000 000 which occurs evenly throughout the year. Trade receivable are expected to continue at the same level for the next year. The factor will advance 80% of the invoiced sales and will charge interest at a rate of 10% per annum. Required: The interest charge for the next year payable to the factor will be: A. R50 000 B. R200 000 C. R300 000 D. R1 200 000

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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A4
Receivables Investment Snider Industries sells on terms of 2/10, net 45. Total sales for the year are $1,300,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 50 days after their purchases. Assume a 365-day year. What is the days sales outstanding? Do not round intermediate calculations. Round your answer to the nearest whole number. days What is the average amount of receivables? Do not round intermediate calculations. Round your answer to the nearest dollar. $ What would happen to average receivables if Snider toughened its collection policy with the result that all nondiscount customers paid on the 45th day? Do not round intermediate calculations. Round your answer to the nearest dollar. $
Using Table 6–13, what is required in new financing if next year’s salesforecast increases to $400,000, profit margin is 10 percent, and the payoutratio is 90 percent?
Lewellen Products has projected the following sales for the coming year: 01 02 03 04 Sales $940 $1,020 $980 $1,080 Sales in the year following this one are projected to be 20 percent greater in each quarter a. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 30 percent of projected sales for the next quarter. Assume that the company pays immediately. What is the payables period in this case? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate payments to suppliers assuming a 90-day payables period. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. Calculate payments to suppliers assuming a 60-day payables period. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) a. b. Payment of accounts Payment of accounts Payment of accounts 01 02 Q3 Q4
Calculating Payments Marshall plc's purchases from suppliers in a quarter are equal to 75 per cent of the next quarter's forecast sales. The payables period is 60 days. Wages, taxes and other expenses are 20 per cent of sales, and interest and dividends are £60 per quarter. No capital expenditures are planned. Here are the projected quarterly sales: Sales (£) Q1 750 Q2 920 Q3 Q4 890 790 Sales for the first quarter of the following year are projected at £970. Calculate the com- pany's cash outlays by completing the following: Payment of accounts Wages, taxes, other expenses Long-term financing expenses. (interest and dividends) Total Q1 Q2 Q3 Q4
14.46 Well-managed companies set aside money to pay for emergencies that inevitably arise in the course of doing business. A commercial solid-waste recycling and disposal company in Mexico City puts 0.5% of its after-tax income into such an account. (a) How much will the company have after 7 years if after-tax income averages $15.2 million and inflation and market interest rates are 5% per year and 9% per year, respectively? (b) What will be the buying power of that amount in today's dollars?
Review Annual Profit Rate Given the following information compute the annual profit rate: Investment Duration (months) Balance Account 1000 250000 150000 12 24 6 Profit Distributable 30 23500 1500 Application Mudaraba The Unre tricted Investment Accounts (UIA) of an Islamic Bank are based on a Mudaraba agreements with a profit-sharing ratio of 40% (Mudarib) and 60% (Capital Provider). The Islamic bank invested the UIA balance of QR 2.500.000 million in an oil company for one year with the agreement to share the profit with the oil company using the following ratio 55% (Mudarib) and 45% (Capital Provider). At the end of the year the oil company earned QR 125.000 as profit. Find the income distributable to the UIA holders. Find the UIA holders annual profit rate. Suppose the market annual profit rate for the same type of Unrestricted Investment Accounts is 1.75 %. What would be the new profit-sharing ratio between the Islamic Bank and the Unrestricted Investment Accounts holders.
Question 11
Problem 9-09 If a firm has sales of $20,689,000 a year, and the average collection period for the industry is 50 days, what should this firm's accounts receivable be if the firm is comparable to the industry? Assume there are 365 days in a year. Do not round intermediate calculations. Round your answer to the nearest dollar. $
Receivables Investment Snider Industries sells on terms of 2/10, net 35. Total sales for the year are $1,400,000. Thirty percent of customers pay on the 10th day and take discounts; the other 70% pay, on average, 40 days after their purchases. Assume a 365-day year. What is the days sales outstanding? Do not round intermediate calculations. Round your answer to the nearest whole number. days What is the average amount of receivables? Do not round intermediate calculations. Round your answer to the nearest dollar. $ What would happen to average receivables if Snider toughened its collection policy with the result that all nondiscount customers paid on the 35th day? Do not round intermediate calculations. Round your answer to the nearest dollar. $
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12. Nonannual compounding period The number of compounding periods in one year is called compounding frequency. The compounding frequency affects both the present and future values of cash flows. A. An investor can invest money with a particular bank and earn a stated interest rate of 6.60%; however, interest will be compounded quarterly. What are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate Periodic rate Effective annual rate B. You want to invest $24,000 and are looking for safe investment options. Your bank is offering you a certificate of deposit that pays a nominal rate of 6% that is compounded quarterly. What is the effective rate of return that you will earn from this investment? 6.221% 5.995% 6.014% 6.136% C. Suppose you decide to deposit $24,000 in a savings account that pays a nominal rate of 12%, but interest is…

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