Questions from Corporate Finance


Q: Longhorn Traders is one of the largest RV dealers in Austin,

Longhorn Traders is one of the largest RV dealers in Austin, Texas, and sells about 2,800 recreational vehicles a year. The cost of placing an order with Longhorn’s supplier is $800, and the inventory...

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Q: The Clarkson Designer Company Management wants to borrow $750,000

The Clarkson Designer Company Management wants to borrow $750,000.The bank will provide the loan at an APR of 6.875 percent. Since the loan calls for a compensating balance, the effective interest rat...

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Q: The Colonial Window Treatments Company is borrowing $1.5 million

The Colonial Window Treatments Company is borrowing $1.5 million. The loan requires a 10 percent compensating balance, and the effective interest rate on the loan is 9.75 percent. What is the stated A...

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Q: Gruppa, Inc., has just set up a formal line of

Gruppa, Inc., has just set up a formal line of credit of $10 million with First Community Commercial Bank. The line of credit is good for up to five years. The bank will charge Gruppa an interest rate...

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Q: Lansdowne Electronics has a formal line of credit of $1 million

Lansdowne Electronics has a formal line of credit of $1 million for up to three years with HND Bank. The interest rate on the loan is 5.3 percent, and under the agreement, Lansdowne has to pay an annu...

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Q: Jennifer Electrical is evaluating whether a lockbox it is currently using is

Jennifer Electrical is evaluating whether a lockbox it is currently using is worth keeping. Management estimates that the lockbox reduces the mail float by 1.8 days and the processing by half a day. T...

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Q: Hazel Corp. has just signed up for a lockbox. Management

Hazel Corp. has just signed up for a lockbox. Management expects the lockbox to reduce the mail float by 2.1 days. Hazel Corp.’s remittances average $37,000 a day, and the average check is $125. The b...

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Q: Ginseng Company collects 50 percent of its receivables in 10 days or

Ginseng Company collects 50 percent of its receivables in 10 days or fewer, 31 percent in 11 to 30 days, 7 percent in 31 to 45 days, 7 percent in 46 to 60 days, and 5 percent in more than 60 days. The...

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Q: Explain how lockboxes are used?

Explain how lockboxes are used?

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Q: A partial aging of accounts receivable for Lincoln Cleaning Services is given

A partial aging of accounts receivable for Lincoln Cleaning Services is given in the accompanying table. What percent of receivables are in the 45-day range? Determine the firm’s eff...

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