Cow Chips, Incorporated, a large fertilizer distributor based in California, is planning use a lockbox system to speed up collections from its customers located on the Ea Coast. A Philadelphia-area bank will provide this service for an annual fee of $6,500 pl 10 cents per transaction. The estimated reduction in collection and processing time one day. Treasury bills are currently yielding 4 percent per year, and there are 365 da per year. If the average customer payment in this region is $2,900, how many customers ear day, on average, are needed to make the system profitable for Cow Chips? (Do n round intermediate calculations and round your answer to 2 decimal places. 32.16.)
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- P15–13 LOCKBOX SYSTEM Eagle Industries believes that a lockbox system can shorten its accounts receivable collection period by 3 days. Credit sales are $3,240,000 per year, billed on a continuous basis. The firm has other equally risky investments that earn a return of 15%. The cost of the lockbox system is $9,000 per year. (Note: Assume a 365-day year.) What amount of cash will be made available for other uses under the lockbox system? What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system?Problem 9-30 (Algo) Payments required [LO4] You need $24,756 at the end of 8 years, and your only investment outlet is an 9 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year. Use Appendix B and Appendix C for an approximate answer, but calculate your final answer using the formula and financial calculator methods. a. What single payment could be made at the beginning of the first year to achieve this objective? Note: Do not round Intermediate calculations. Round your final answer to 2 decimal places. Single payment made b. What amount could you pay at the end of each year annually for 8 years to achieve this same objective? Note: Do not round Intermediate calculations. Round your final answer to 2 decimal places. Amount to be paidItem 17 A firm has daily cash receipts of P300,000 and is interested in acquiring a lockbox service in order to reduce collection time. Bank 1's lockbox service costs P3,000 per month and will reduce collection time by 3 days. Bank 2's lockbox service costs P5,000 per month and will reduce collection time by 4 days. Bank 3's lockbox service costs P500 per month and will reduce collection time by 1 day, Bank 4's lockbox service costs P1,000 per month and will reduce çollection time by 2 days, If money market rates are expected to average 6% during the year, and the firm wishes to maximize income, which bank should the firm choose? Select the correct response: O Bank 3. O consistency O Bank 2. O Bank 4. O Bank 1
- REPLACEMENT CHAIN The Fernandez Company has an opportunity to invest in one of two mutually exclusive machines that will produce a product the company will need for the next eight years. Machine A costs 10 million but will provide after-tax inflows of 4 million per year for 4 years. If Machine A were replaced, its cost would be 12 million due to inflation and its cash inflows would increase to 4.2 million due to production efficiencies. Machine B costs 15 million and will provide after-tax inflows of 3.5 million per year for 8 years. If the WACC is 10%, which machine should be acquired? Explain.Problem 10.11 Franklin Mints, a confectioner, is considering purchasing a new jelly bean-making machine at a cost of $219,536. The company's management projects that the cash flows from this investment will be $98,843 for the next seven years. If the appropriate discount rate is 14 percent, what is the IRR that Franklin Mints management can expect on this project? (Round answer to 2 decimal places, e.g. 5.25%.) IRR is Click if you would like to Show Work for this question: Open Show WorkProblem 12 (DSO and Accounts Receivable) James Inc. currently has P750,000 in accounts receivable, and its day sales outstanding (DSO) is 55 days. It wants to reduce its DSO to 35 days by pressuring more of its customers to pay their bills on time. If this policy is adopted, the company's average sales will fall by 15%. What will be the level of accounts receivable following the change? Assume a 365-day year.
- 9 eBook Print References Broxton Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects. Assume the discount rate is 9 percent. Further, the company has only $16 million to invest in new projects this year. a. Year b. O 123 Cash Flows (in $ millions) L6 G5 Wi-Fi 5.0 $ $ 8.0 4.5 2.5 11 9260 24 16 $ a. Calculate the profitability index for each investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. Calculate the NPV for each investment. (Do not round intermediate calculations and enter your answers in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) L6 profitability index G5 profitability index Wi-Fi profitability index L6 NPV G5 NPV Wi-Fi NPV 16 14 28 1616. Problem 4.20 (DSO and Accounts Receivable) eBook Problem Walk-Through Ingraham Inc. currently has $790,000 in accounts receivable, and its days sales outstanding (DSO) is 61 days. It wants to reduce its DSO to 35 days by pressuring more of its customers to pay their bills on time. If this policy is adopted, the company's average sales will fall by 25%. What will be the level of accounts receivable following the change? Assume a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent.QUESTION 9 Accusoft Systems is offering small business owners a software package that keeps track of many accounting functions from bank transactions to sales invoices. The site license will cost $50,000 to install and will require a fee of $5000 every 3 months. If your company can save $13,500 every quarter and have the security of managing its books in-house, how long will it take for you to recover the investment at an interest rate of 12% per quarter? The time taken to recover the investment, (in quarters) Round to the nearest one (1) decimal place
- Problem 4-27 (Algo) Percent-of-sales method [LO4-3] Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Cash Accounts receivable Inventory Current assets Fixed assets Assets Total assets New funds $ Balance Sheet (in $ millions) 18 $10 22 27 $59 47 Liabilities and Stockholders' Equity Accounts payable Accrued wages Accrued taxes Current liabilities $106 Owen's Electronics has an aftertax profit margin of 8 percent and a dividend payout ratio of 50 percent. If sales grow by 25 percent next year, determine how many dollars of new funds are needed to finance the growth. Note: Do not round intermediate calculations. Enter your answer in dollars, not millions, (e.g.,…Problem 4-27 (Algo) Percent-of-sales method [LO4-3] Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Cash Accounts receivable. Inventory Current assets Assets Fixed assets Balance Sheet (in 5 millions). Liabilities and Stockholders' Equity $5 Accounts payablet 23 26 $ 54 43 Accrued wages Accrued taxes. Current liabilities Notes payable Common stock Retained earnings. $97 Total liabilities and stockholders equity Answer is complete but not entirely correct. New funds 21 $18 5 11 $34 13 18 32 $ 97 Total assets Owen's Electronics has an aftertax profit margin of 8 percent and a dividend payout ratio of 30 percent. If sales grow by 15 percent next year, determine how…Problem 4-27 (Algo) Percent-of-sales method [LO4-3] Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous years (and this will continue in the future). All assets (including fixed assets) and current liabilities will vary directly with sales. The firm is working at full capacity. Cash Accounts receivable Inventory Current assets. Fixed assets Total assets Assets New funds at I can't message you ahead of time because of 1 Balance Sheet (in $ millions) 2 $ 11 28 29 $ 68 46 OCT $ 114 Liabilities and Stockholders' Equity Accounts payable Accrued wages Accrued taxes Owen's Electronics has an aftertax profit margin of 10 percent and a dividend payout ratio of 50 percent. If sales grow by 30 percent next year, determine how many dollars of new funds are needed to finance the growth. Note: Do not round intermediate calculations. Enter your answer…