Chapter 3: 9DQ (page 247)
What is the difference between pledging accounts receivable and factoring accounts receivable?
The accounts receivables when used as a collateral, it is considered pledging and when it is sold, then is considered factoring.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Boatler Used Cadillac Co. requires $850,000 in financing over the next two years. The firm can borrow the funds for two years at 12 percent interest per year. Mr. Boatler decides to do forecasting and predicts that if he utilizes short term financing instead, he will pay 7.75 percent interest in the first year and 13.55 percent interest in the second year. Determine the total two-year interest cost under each plan. Which plan is less costly?
Why might a firm keep a safety stock? What effect is it likely to have on carrying cost of inventory?
In the management of cash and marketable securities, why should the primary concern be for safety and liquidity rather than maximization of profit?
Question: Nowlin Pipe & Steel has projected sales of 72,000 pipes this year, an ordering cost of \(6 per order, and carrying costs of \)2.40 per pipe.
b. How many orders will be placed during the year?
Gary’s Pipe and Steel Company expects sales next year to be \(800,000 if the economy is strong, \)500,000 if the economy is steady, and $350,000 if the economy is weak. Gary believes there is a 20 percent probability the economy will be strong, a 50 percent probability of a steady economy, and a 30 percent probability of a weak economy. What is the expected level of sales for next year?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
