The collection float.

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Answer 1

Question

Chapter 15, Problem 15.14P

a.

Summary Introduction

To determine: The collection float.

b.

Summary Introduction

To determine: Whether it be economically advisable for the firm to pay an annual fee of $16,500 to reduce collection float by 2 days.

c.

Summary Introduction

To determine: The Company’s opportunity cost have to be to make the $16,500 fee worthwhile.

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Scenario one: Under what circumstances would it be appropriate for a firm to use different cost of capital for its different operating divisions? If the overall firm WACC was used as the hurdle rate for all divisions, would the riskier division or the more conservative divisions tend to get most of the investment projects? Why? If you were to try to estimate the appropriate cost of capital for different divisions, what problems might you encounter? What are two techniques you could use to develop a rough estimate for each division’s cost of capital?

Answer 2

Question

Chapter 15, Problem 15.14P

a.

Summary Introduction

To determine: The collection float.

b.

Summary Introduction

To determine: Whether it be economically advisable for the firm to pay an annual fee of $16,500 to reduce collection float by 2 days.

c.

Summary Introduction

To determine: The Company’s opportunity cost have to be to make the $16,500 fee worthwhile.

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Answer 3

Question

Chapter 15, Problem 15.14P

a.

Summary Introduction

To determine: The collection float.

b.

Summary Introduction

To determine: Whether it be economically advisable for the firm to pay an annual fee of $16,500 to reduce collection float by 2 days.

c.

Summary Introduction

To determine: The Company’s opportunity cost have to be to make the $16,500 fee worthwhile.

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Answer 4

Question

Chapter 15, Problem 15.14P

a.

Summary Introduction

To determine: The collection float.

b.

Summary Introduction

To determine: Whether it be economically advisable for the firm to pay an annual fee of $16,500 to reduce collection float by 2 days.

c.

Summary Introduction

To determine: The Company’s opportunity cost have to be to make the $16,500 fee worthwhile.

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Answer 5

Chapter 15, Problem 15.14P

a.

Summary Introduction

To determine: The collection float.

b.

Summary Introduction

To determine: Whether it be economically advisable for the firm to pay an annual fee of $16,500 to reduce collection float by 2 days.

c.

Summary Introduction

To determine: The Company’s opportunity cost have to be to make the $16,500 fee worthwhile.

Answer 6

Chapter 15, Problem 15.14P

a.

Summary Introduction

To determine: The collection float.

Answer 7

Chapter 15, Problem 15.14P

a.

Summary Introduction

To determine: The collection float.

Answer 8

b.

Summary Introduction

To determine: Whether it be economically advisable for the firm to pay an annual fee of $16,500 to reduce collection float by 2 days.

Answer 9

b.

Summary Introduction

To determine: Whether it be economically advisable for the firm to pay an annual fee of $16,500 to reduce collection float by 2 days.

Answer 10

c.

Summary Introduction

To determine: The Company’s opportunity cost have to be to make the $16,500 fee worthwhile.

Answer 11

c.

Summary Introduction

To determine: The Company’s opportunity cost have to be to make the $16,500 fee worthwhile.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 15.1 - Why is working capital management one of the most...Ch. 15.1 - Prob. 15.2RQ Ch. 15.1 - Prob. 15.3RQ Ch. 15.2 - Prob. 15.4RQ Ch. 15.2 - Prob. 15.5RQ Ch. 15.2 - What are the benefits, costs, and risks of an...Ch. 15.2 - Prob. 15.7RQ Ch. 15.3 - Prob. 1FOP Ch. 15.3 - Prob. 15.8RQ Ch. 15.3 - Briefly describe the following techniques for...

The collection float.

Solution Summary: The author explains that the firm should not pay an annual fee of 16,500 to reduce collection float by 2 days because the savings (1,700) exceed the costs (16,500).

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To determine: The collection float.

To determine: Whether it be economically advisable for the firm to pay an annual fee of $16,500 to reduce collection float by 2 days.

To determine: The Company’s opportunity cost have to be to make the $16,500 fee worthwhile.

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Chapter 15 Solutions