Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
14th Edition
ISBN: 9780133507690
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Chapter 16, Problem 16.16P
a)
Summary Introduction
To discuss: The acceptable accounts receivable.
b)
Summary Introduction
To discuss: The available funds.
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You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $),
and the payoff for the loan (in $). (Round dollars to the nearest cent.)
Amount Number of
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$1,700
18
Monthly
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$125.89
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You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $),
and the payoff for the loan (in $). (Round dollars to the nearest cent.)
Finance
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Number of Monthly Payments
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Payment
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Rebate
Fraction
Charge
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$4,600
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$163.33
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Kansas City Castings (KCC) is attempting to obtain the maximum loan possible using accounts receivable as collateral. The firm extends net-30-day credit. The amounts that are owed KCC by its 12 credit customers, the average age of each account, and the customer’s average payment period are as shown in the following table.
If the bank will accept all accounts that can be collected in 45 days or less as long as the customer has a history of paying within 45 days, which accounts will be acceptable? What is the total dollar amount of accounts receivable collateral? (Note: Accounts receivable that have an average age greater than the customer’s average payment period are also excluded.)
In addition to the conditions in part a, the bank recognizes that 5% of credit sales will be lost to returns and allowances. Also, the bank will lend only 80% of the acceptable collateral (after adjusting for returns and allowances). What level of funds would be made available through this lending…
Chapter 16 Solutions
Principles of Managerial Finance (14th Edition) (Pearson Series in Finance)
Ch. 16.1 - Prob. 1FOECh. 16.1 - What are the two major sources of spontaneous...Ch. 16.1 - Prob. 16.2RQCh. 16.1 - Prob. 16.3RQCh. 16.2 - Prob. 1FOPCh. 16.2 - How is the prime rate of interest relevant to the...Ch. 16.2 - How does the effective annual rate differ between...Ch. 16.2 - What are the basic terms and characteristics of a...Ch. 16.2 - What is a line of credit? Describe each of the...Ch. 16.2 - What is a revolving credit agreement? How does...
Ch. 16.2 - Prob. 16.9RQCh. 16.2 - Prob. 16.10RQCh. 16.3 - Are secured short-term loans viewed as more risky...Ch. 16.3 - In general, what interest rates and fees are...Ch. 16.3 - Describe and compare the basic features of the...Ch. 16.3 - For the following methods of using inventory as...Ch. 16 - Prob. 1ORCh. 16 - Prob. 16.1STPCh. 16 - Prob. 16.1WUECh. 16 - Prob. 16.2WUECh. 16 - Prob. 16.3WUECh. 16 - Prob. 16.4WUECh. 16 - Horizon Telecom sold 300,000 worth of 120-day...Ch. 16 - Prob. 16.1PCh. 16 - Prob. 16.2PCh. 16 - Prob. 16.3PCh. 16 - Learning Goal 1 P16-4 Early payment discount...Ch. 16 - Prob. 16.5PCh. 16 - Prob. 16.6PCh. 16 - Prob. 16.7PCh. 16 - Prob. 16.8PCh. 16 - Prob. 16.9PCh. 16 - Unsecured sources of short-term loans John Savage...Ch. 16 - Learning Goal 3 P16-11 Effective annual rate A...Ch. 16 - Prob. 16.12PCh. 16 - Compensating balance versus discount loan Weathers...Ch. 16 - Prob. 16.14PCh. 16 - Cost of commercial paper Commercial paper is...Ch. 16 - Prob. 16.16PCh. 16 - Prob. 16.17PCh. 16 - Prob. 16.18PCh. 16 - Prob. 16.19PCh. 16 - Inventory financing Raymond Manufacturing faces a...Ch. 16 - ETHICS PROBLEM Rancco Inc. reported total sales of...
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