a.
To determine: The net pre-tax benefits if annual sales are $15 million.
a.
Answer to Problem 6P
The net pre-tax benefits if annual sales are $15 million is $8,630.14.
Explanation of Solution
Determine the annual pre-tax earnings
Therefore, the amount of funds released is $8,630.14.
Determine the additional collection costs
Therefore, the additional collection costs is $14,250.
Determine the net pre-tax benefits
Therefore, the net pre-tax benefits is -$5,619.86.
b.
To determine: The net pre-tax benefits if annual sales are $75 million.
b.
Answer to Problem 6P
The net pre-tax benefits if annual sales are $75 million is $28,900.68.
Explanation of Solution
Determine the net pre-tax benefits
Therefore, the net pre-tax benefits is -$28,900.68.
c.
To determine: The net pre-tax benefits if annual sales are $15 million with 2 days of collection time.
c.
Answer to Problem 6P
The net pre-tax benefits if annual sales are $15 million is $2,753.42.
Explanation of Solution
Determine the net pre-tax benefits
Therefore, the net pre-tax benefits is $2,753.42.
d.
To determine: The net pre-tax benefits if annual sales are $75 million with 2 days of collection time.
d.
Answer to Problem 6P
The net pre-tax benefits if annual sales are $75 million is $25,767.12.
Explanation of Solution
Determine the net pre-tax benefits
Therefore, the net pre-tax benefits is $25,767.12.
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Chapter 17 Solutions
Contemporary Financial Management, Loose-leaf Version
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