Problem ARain Co. has a total fixed asset of P100,000. The current asset per quarter of the company isshown below:1st2nd3rd4thQuarterQuarterQuarterQuarter15,00012,00017,00020,50011,50017,00022,000Cash19,000Accounts Receivable30,00025,000Inventories16,00015,000What is the level of long-term financing if Rain Co.'s policy is to finance all fixed asset and 50%of the permanent current assets with long-term financing and the remaining with short-termfinancing?

Long term financing can be calculated using the long term debt to total assets ratio. This ratio…

Answered: Rain Co. has a total fixed asset of…

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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Jem Jewelers has seasonal financing needs that vary from P250,000 to P2,725,000. The permanent financing requirement is P4,100,000. Indicate the appropriate strategy for each situation wheter it is AGGRESSIVE FINANCING or CONSERVATIVE FINANCING. a. Due to high inflation , short- term interest rates are much higher than long-term ratesb. Sales revenue is unpredictablec. The firm has large proportion of fixed assets in its total assetsd. The average seasonal financing need is P1,000,000e. The average seasonal financing nedd is P2,000,000
1
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Dalvi Incorporated is considering a new Investment. The table below lists the cash flows. Year Cash Flows -$19600 1 $6,600 2 $5,600 3 $7,400 Calculate the Payback period Calculate the NPV and IRR. Assume that the interest rate is 0%.
Answer the following
National Co. is considering a 5-year, P6,000,000 bank loan to finance service equipment. The loan has an interest rate of 7.5 percent and is amortized over five years with end-of-year payments. National Co. can also lease the equipment for an end-of-year payment of P1,500,000. What is the difference in the actual out of pocket cash flows between the two payments? That is, by how much does one payment exceed the other?
Racman, Inc. needs P2,000,000 to finance its extension program. Racman, Inc. is negotiating a loan with Metropolis Bank which requires the company to maintain a compensating balance of 10% of the loan principal on deposit in a current account at the bank. Pierce, Inc. currently maintains a balance of P20,000 in its current account. The current account earns interest of 2% per annum. The interest rate on the loan is 12% per annum. 1. What is the effective interest rate on the loan?
Please solve for all sub-parts of the question displayed on image.
A company is planning to expand its business is costing OMR 19252. The following cash inflows are expected. Calculate Profitability index given the rate of discounting to be 3.008% Years Machine A 12396 13300 12500 4 14500 2. 3.
A company spends on average €75,000 per week to pay its bills and maintains a lower cash balance limit of €40,000. The applicable interest rate is 6.12 percent and the fixed cost of transferring funds is €32. What is the optimal initial cash balance based on the BAT model
cO X HAS cASH BALANCE OF $33 AND SHORT TERM LOAN BALANCE OF $200 AT THE BEGINNING OF QTR 1. THE NET CASH INFLOW FOR THE 1ST QTR IS $89 AND THE FOR THE SECOND QTR THERE IS A NET CAHS OUTFLOW OF $44. aLL CASH SHORTFALLS ARE FUNDED WITH SHORT TERM DEBT. THE FIRM PAYS 2% OF ITS PRIOR QUARTERS ENDING LOAN BALANCE AS INTERST EACH QUARTER. THE MINIMUM CASH BALANCE IS $25. wHAT IS THE SHORT TERM LOAN BALANCE AT THE END OF THE YEAR? available anwsers are 107 111 121 128 133
Wontaby Ltd. is extending its credit terms from 45 to 60 days. Sales are expected to increase from $4.75 million to $5.85 million as a result. Wontaby finances short - term assets at the bank at a cost of 12 percent annually. Calculate the additional annual financing cost of this change in credit terms. (Use 365 days in a year. Do not round intermediate calculations. Round the final answer to the nearest whole dollar. Enter answer in whole dollar not in million.) Annual financing costN

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