Questions from Corporate Finance


Q: Purple Feet Wine, Inc., receives an average of $18

Purple Feet Wine, Inc., receives an average of $18,600 in checks per day. The delay in clearing is typically three days. The current interest rate is .017 percent per day. a. What is the company’s flo...

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Q: Your neighbor goes to the post office once a month and picks

Your neighbor goes to the post office once a month and picks up two checks, one for $8,450 and one for $4,200. The larger check takes four days to clear after it is deposited; the smaller one takes th...

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Q: Your firm has an average receipt size of $135. A

Your firm has an average receipt size of $135. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 4,900 checks per...

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Q: Consider the following information about Stocks I and II:

Consider the following information about Stocks I and II: The market risk premium is 7 percent, and the risk-free rate is 3.5 percent. Which stock has the most systematic risk? Which one has the mos...

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Q: A mail-order firm processes 5,800 checks per month

A mail-order firm processes 5,800 checks per month. Of these, 60 percent are for $49 and 40 percent are for $84. The $49 checks are delayed two days on average; the $84 checks are delayed three days o...

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Q: Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection

Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day …………………………………………. 435 Average value...

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Q: It takes Cookie Cutter Modular Homes, Inc., about six days

It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposit checks from customers. The company’s management is considering a lockbox system to reduce the firm’s collection times....

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Q: Every two weeks, No More Pencils, Inc., disburses checks

Every two weeks, No More Pencils, Inc., disburses checks that average $124,000 and take seven days to clear. How much interest can the company earn annually if it delays transfer of funds from an inte...

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Q: You place an order for 250 units of inventory at a unit

You place an order for 250 units of inventory at a unit price of $190. The supplier offers terms of 1/10, net 30. a. How long do you have to pay before the account is overdue? If you take the full pe...

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Q: Red Hawk, Inc., is considering a change in its cash

Red Hawk, Inc., is considering a change in its cash-only sales policy. The new terms of sale would be net one month. Based on the following information, determine if the company should proceed or not....

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