a
Case summary:JM is credit manager required to a topic on using credit wisely. Where consumer credit is defined, credit for graduates and resolving budgetary imbalance is explained.
Characters in the case : JM of Vancouver Washington.
Adequate information: JM require to deliver a speech about using credit wisely. He is required to determine consumer credit use of credit by graduates.
To determine: If J’s enthusiasm over the idea of debt consolidation is justified.
Introduction:
Over indebtedness:it is the situation when excessive debts make repayment difficult and cause financial distress. They are many signs of over indebtedness, they are. (1) Not knowing how much you owe, (2) running out of money, (3) Paying only minimum amount due, (4) exceeding debt limit and credit limits, (5) increases credit limits, (6) using cash advances to pay credit cards (7) Skipping credit payments and (8) refinancing or consolidation.
Only way to get out from excessive debt is cut down on your spending and put the extra money towards your debt payments.
b
Case summary:JM is credit manager required to a topic on using credit wisely. Where consumer credit is defined, credit for graduates and resolving budgetary imbalance is explained.
Characters in the case : JM of Vancouver Washington.
Adequate information: JM require to deliver a speech about using credit wisely. He is required to determine consumer credit use of credit by graduates.
To determine: The use of credit by graduates.
Credit managementis an arrangement in which goods, services, can be bought or money is received with a promise to repay at a pre specified date. Credit is a form of contractual agreement between a lender and a borrower. If the lender believes that a potential borrower will repay the money, than credit will be extended.
c
Case summary:JM is credit manager required to a topic on using credit wisely. Where consumer credit is defined, credit for graduates and resolving budgetary imbalance is explained.
Characters in the case : JM of Vancouver Washington.
Adequate information: JM require to deliver a speech about using credit wisely. He is required to determine consumer credit use of credit by graduates.
To determine: The use of credit wisely by graduates.
Credit management is an arrangement in which goods, services, can be bought or money is received with a promise to repay at a pre specified date. Credit is a form of contractual agreement between a lender and a borrower. If the lender believes that a potential borrower will repay the money, than credit will be extended. The borrower is expected to live up to the expectation of lender by repaying the lender with specified interest and any other charges.
d
Case summary:JM is credit manager required to a topic on using credit wisely. Where consumer credit is defined, credit for graduates and resolving budgetary imbalance is explained.
Characters in the case : JM of Vancouver Washington.
Adequate information: JM require to deliver a speech about using credit wisely. He is required to determine consumer credit use of credit by graduates.
To determine: If credit is a good option to resolve their budget imbalance.
Credit management is an arrangement in which goods, services, can be bought or money is received with a promise to repay at a pre specified date. Credit is a form of contractual agreement between a lender and a borrower. If the lender believes that a potential borrower will repay the money, than credit will be extended. The borrower is expected to live up to the expectation of lender by repaying the lender with specified interest and any other charges.
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Chapter 6 Solutions
PERSONAL FINANCE (LL)
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- $1.35 Million for the below question is incorrect, Machine A is $1.81 and Machine B is $0.46 Million. The Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $8 million but realizes after-tax inflows of $4.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs $17 million and realizes after-tax inflows of $4 million per year for 8 years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in the machines. The cost of capital is 13%. Using the replacement chain approach to project analysis, by how much would the value of the company increase if it accepted the better machine? Round your answer to two decimal places. 1.) $1.35 millionarrow_forwardBuggies-Are-Us Steady Freddie, Inc Gang Buster Group g = 0 g = 55% Year 1 $3.51 (i.e., dividends are expected to remain at $3.053.05/share) (for the foreseeable future) Year 2 $4.04 Year 3 $4.63 Year 4 $5.36 Year 5 $6.15 Year 6 and beyond: g = 55%arrow_forwardProject S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to the nearest cent. Calculate the two projects' PIs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to three decimal places. Project L is not 1.07arrow_forward
- Wilbur and Orville are brothers. They're both serious investors, but they have different approaches to valuing stocks. Wilbur, the older brother, likes to use the dividend valuation model. Orville prefers the free cash flow to equity valuation model. As it turns out, right now, both of them are looking at the same stock-Wright First Aerodynmaics, Inc. (WFA). The company has been listed on the NYSE for over 50 years and is widely regarded as a mature, rock-solid, dividend-paying stock. The brothers have gathered the following information about WFA's stock: Current dividend (D) = $2.30/share Current free cash flow (FCF) = $1.5 million Expected growth rate of dividends and cash flows (g) = 5% Required rate of return (r) = 14% Shares outstanding 500,000 shares How would Wilbur and Orville each value this stock?arrow_forwardCompany P/S Multiples Facebook 13.33 Snap 18.22 Twitter 13.27arrow_forwardThe Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $8 million but realizes after-tax inflows of $4.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs $17 million and realizes after-tax inflows of $4 million per year for 8 years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in the machines. The cost of capital is 13%. Using the replacement chain approach to project analysis, by how much would the value of the company increase if it accepted the better machine? Round your answer to two decimal places. 1.) $ millionarrow_forward
- Wilbur and Orville are brothers. They're both serious investors, but they have different approaches to valuing stocks. Wilbur, the older brother, likes to use the dividend valuation model. Orville prefers the free cash flow to equity valuation model. As it turns out, right now, both of them are looking at the same stock-Wright First Aerodynmaics, Inc. (WFA). The company has been listed on the NYSE for over 50 years and is widely regarded as a mature, rock-solid, dividend-paying stock. The brothers have gathered the following information about WFA's stock: Current dividend (D) = $3.30/share Current free cash flow (FCF) = $1.5 million Expected growth rate of dividends and cash flows (g)=8% Required rate of return (r) = 13% Shares outstanding 500,000 shares How would Wilbur and Orville each value this stock? The stock price from Wilbur's valuation is $ (Round to the nearest cent.)arrow_forwardThe Perez Company has the opportunity to invest in one of two mutually exclusive machines that will produce a product it will need for the foreseeable future. Machine A costs $8 million but realizes after-tax inflows of $4.5 million per year for 4 years. After 4 years, the machine must be replaced. Machine B costs $17 million and realizes after-tax inflows of $4 million per year for 8 years, after which it must be replaced. Assume that machine prices are not expected to rise because inflation will be offset by cheaper components used in the machines. The cost of capital is 13%. Using the replacement chain approach to project analysis, by how much would the value of the company increase if it accepted the better machine? Round your answer to two decimal places. 1.) $ million What is the equivalent annual annuity for each machine? Do not round intermediate calculations. Round your answers to two decimal places. 2.) Machine A: $ million 3.) Machine B: $ millionarrow_forwardYou expect to have $29,865. You plan to make X savings contribution of $1,690 per month. The expected return is 0.92 percent per month and the first regular savings contribution will be made later today. What is X? Round to 2 decimal places.arrow_forward
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