EBK FOUNDATIONS OF FINANCIAL MANAGEMENT
EBK FOUNDATIONS OF FINANCIAL MANAGEMENT
17th Edition
ISBN: 9781260464900
Author: BLOCK
Publisher: MCGRAW-HILL LEARNING SOLN.(CC)
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Chapter 3, Problem 34P

a.

Summary Introduction

To calculate: The accounts receivables of the firm.

Introduction:

Accounts receivable turnover:

It shows the efficiency of a firm in issuing credit and collecting funds from its customers within a given time period.

b.

Summary Introduction

To calculate: The marketable securities for the firm.

Introduction:

Marketable securities:

It refers to the financial instruments that can be easily transformed into cash, and can be redeemed or sold in less than a year. Some examples are government bonds and common stock.

c.

Summary Introduction

To calculate: The fixed assets of the firm.

Introduction:

Fixed assets:

It refers to the tangible piece of property that is owned by a company for long term use. Some examples of fixed assets are machinery and building.

d.

Summary Introduction

To calculate: The long-term debt of the firm.

Introduction:

Long-term debt:

It is a long-term loan borrowed by corporations, organizations or the government to fulfil their economic needs. It is issued at fixed interest depending upon the reputation of the corporation.

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Pam and Jim are saving money for their two children who they plan to send to university.The eldest child will enter university in 5 years while the younger will enter in 7 years. Each child is expected spend four years at university. University fees are currently R20 000 per year and are expected to grow at 5% per year. These fees are paid at the beginning of each year.Pam and Jim currently have R40 000 in their savings and their plan is to save a fixed amount each year for the next 5 years. The first deposit taking place at the end of the current year and the last deposit at the date the first university fees are paid.Pam and Jim expect to earn 10% per year on their investments.What amount should they invest each year to meet the cost of their children’s university fees?

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EBK FOUNDATIONS OF FINANCIAL MANAGEMENT

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