Questions from Financial Markets

Q: 1. The risk-free interest rate is made up of

1. The risk-free interest rate is made up of which of the following components in addition to a real rate of interest? a. Inflation premium b. Default risk premium c. Market risk premium d. Liquid...

Q: Given Robinson’s 2016 and 2017 financial information presented in problems 3 and

Given Robinson’s 2016 and 2017 financial information presented in problems 3 and 4, a) Compute its operating and cash conversion cycle in each year. b) What was Robinson’s net investment in working...

Q: Robinson expects its 2018 sales and cost of goods sold to grow

Robinson expects its 2018 sales and cost of goods sold to grow by 5 percent over their 2017 levels. a) What will be the effect on its levels of receivables, inventories, and payments if the component...

Q: Robinson expects its 2018 sales and cost of goods sold to grow

Robinson expects its 2018 sales and cost of goods sold to grow by 20 percent over their 2017 levels. a) What will be the effect on its levels of receivables, inventories, and payments if the component...

Q: Financial statements for the Genatron Manufacturing Corporation for the years 2016 and

Financial statements for the Genatron Manufacturing Corporation for the years 2016 and 2017 are listed in the text. Calculate Genatron’s operating cycle and cash conversion cycle for 2016 and 2017. Wh...

Q: Genatron Manufacturing expects its sales to increase by 10 percent in 2018

Genatron Manufacturing expects its sales to increase by 10 percent in 2018. Estimate the firm’s investment in accounts receivable, inventory, and accounts payable in 2018.

Q: A supplier is offering your firm a cash discount of 2 percent

A supplier is offering your firm a cash discount of 2 percent if purchases are paid for within 10 days; otherwise the bill is due at the end of 60 days. Would you recommend borrowing from a bank at an...

Q: Wonder Dog Leash Company is examining their accounts receivable patterns. Wonder’s

Wonder Dog Leash Company is examining their accounts receivable patterns. Wonder’s customers are offered terms of 1/10 net 30. Of their receivables, $150,000 are current, $75,000 are one-month overdue...

Q: Wonder Dog Leash Company is seeking to raise cash and is in

Wonder Dog Leash Company is seeking to raise cash and is in negotiation with Big Bucks finance company to pledge their receivables. BB is willing to loan funds against 75% of current (that is, not ove...

Q: Michael’s Computers is evaluating proposals from two different factors who will provide

Michael’s Computers is evaluating proposals from two different factors who will provide receivables financing. Big Fee Factoring will finance the receivables at an APR of 8 percent, discounted, and ch...