Questions from Financial Management

Q: Del Hawley, owner of Hawley’s Hardware, is negotiating with First

Del Hawley, owner of Hawley’s Hardware, is negotiating with First City Bank for a 1-year loan of $50,000. First City has offered Hawley the alternatives listed below. Calculate the effective annual in...

Q: Gifts Galore Inc. borrowed $1.5 million from National

Gifts Galore Inc. borrowed $1.5 million from National City Bank. The loan was made at a simple annual interest rate of 9% a year for 3 months. A 20% compensating balance requirement raised the effecti...

Q: The Boyd Corporation has annual credit sales of $1.6

The Boyd Corporation has annual credit sales of $1.6 million. Current expenses for the collection department are $35,000, bad-debt losses are 1.5%, and the days sales outstanding is 30 days. The firm...

Q: Kim Mitchell, the new credit manager of the Vinson Corporation,

Kim Mitchell, the new credit manager of the Vinson Corporation, was alarmed to find that Vinson sells on credit terms of net 90 days while industry-wide credit terms have recently been lowered to net...

Q: Yonge Corporation must arrange financing for its working capital requirements for the

Yonge Corporation must arrange financing for its working capital requirements for the coming year. Yonge can: (a) borrow from its bank on a simple interest basis (interest payable at the end of the lo...

Q: The Russ Fogler Company, a small manufacturer of cordless telephones,

The Russ Fogler Company, a small manufacturer of cordless telephones, began operations on January 1. Its credit sales for the first 6 months of operations were as follows: Throughout this entire perio...

Q: Malone Feed and Supply Company buys on terms of 1/10

Malone Feed and Supply Company buys on terms of 1/10, net 30, but it has not been taking discounts and has actually been paying in 60 rather than 30 days. Assume that the accounts payable are recorded...

Q: Explain how each of the following factors would probably affect a firm’s

Explain how each of the following factors would probably affect a firm’s target cash balance if all other factors were held constant. a. The firm institutes a new billing procedure that better synchro...

Q: a. Baumol model b. Total carrying cost; total

a. Baumol model b. Total carrying cost; total ordering cost; total inventory costs c. Economic Ordering Quantity (EOQ); EOQ model; EOQ range d. Reorder point; safety stock e. Red-line method; two-bin...

Q: Indicate by a (+), (_), or (0) whether each of

Indicate by a (+), (_), or (0) whether each of the following events would probably cause average annual inventory holdings to rise, fall, or be affected in an indeterminate manner: a. Our suppliers ch...