Chapter 3: 3BP (page 184)
Tobin Supplies Company expects sales next year to be
Short Answer
The external financing that the company has to seek is $54,000.
Chapter 3: 3BP (page 184)
Tobin Supplies Company expects sales next year to be
The external financing that the company has to seek is $54,000.
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Get started for freeRoute Canal Shipping Company has the following schedule for aging of accounts receivable:
d. Disregarding your answer to part c and considering the aging schedule for accounts receivable, should the company be satisfied?
By using long-term financing to finance part of temporary current assets, a firm may have less risk but lower returns than a firm with a normal financing plan. Explain the significance of this statement.
Carmenโs Beauty Salon has estimated monthly financing requirements for the next six months as follows:
January | \(8,500 |
February | \)2,500 |
March | \(3,500 |
April | \)8,500 |
May | \(9,500 |
June | \)4,500 |
Short-term financing will be utilized for the next six months.
January | 9% |
February | 10% |
March | 13% |
April | 16% |
May | 12% |
June | 12% |
Here are the projected annual interest rates:
a. Compute total dollar interest payments for the six months. To convert an annual rate to a monthly rate, divide by 12. Then multiply this value times the monthly balance. To get your answer, add up the monthly interest payments.
b. If long-term financing at 12 percent had been utilized throughout the six months, would the total-dollar interest payments be larger or smaller? Compute the interest owed over the six months and compare your answer to that in part a.
Briefly discuss three types of lender control used in inventory financing.
Guardian Inc. is trying to develop an asset financing plan. The firm has
a. Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 75 percent of assets financed by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed by long-term sources. The current interest rate is 15 percent on long-term funds and 10 percent on short-term financing.
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