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hodyreva [135]
3 years ago
14

June sales were $30,000, while projected sales for July and August were $52,000 and $74,000, respectively. Sales are 60% cash an

d 40% credit. All credit sales are collected in the month following the sale. Calculate expected collections for July.
Business
1 answer:
Step2247 [10]3 years ago
5 0

Answer:

Collections for July = $43200

Explanation:

Sales on cash are generally collected immediately, hence if the sale occurs in June, it would be collected in June itself. Sales on credit on the other hand, is where the debtor can pay for the goods or services on a later date. In this case, it is paid in the next month after the sale.

According to the information cash collections are 60%. Hence in July, 60% of $52,000 would be obtained, which is - $52,000 x 60% = $31,200.

At the same time, the sales on credit made in June would be collected in July. Since sales on credit amount to 40% of total sales of the month, it would be - $30,000 x 40% = $12,000.

Total collections for July = $12,000 + $31,200 = $43,200.

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8 0
3 years ago
Dragon Inc. a NJ based construction firm is evaluating whether to replace an aging machine with a new model. For the old machine
Vilka [71]

Answer:

It should replace the old machine. In the current accounting period.

Explanation:

We need to perform a relevant cost analysis:

Keep the machine:

F0 = $0

F1 = $1500 maintenance

F2 = $3,000 maintenance

F3 = $6,000 maintenance

F4 = $12,000 maintenance

F5 =$24,000 maintenance + 250 resale value

replace the machine:

F0 = -12,000 purchase + 4,000 sale of old machine = -800

F1 = $900 maintenance

F2 = $900 maintenance

F3 = $900 maintenance

F4 = $900 maintenance

F5 =$900 maintenance + 1,500 resale value

As revenues are the same for each machine, we ignore them. We will only focus on the cost each machine generate:

We solve for the present worth of each machine with a discount rate of 12%

\displaystyle PV_{old} = -\frac{1,500}{1.12} - \frac{3,000}{1.12^2} - \frac{6,000}{1.12^3} - \frac{12,000}{1.12^4} - \frac{23,750}{1.12^5}\\\\\displaystyle PV_{old} = -29,104.15

\displaystyle PV_{new} = -8,000 - \frac{900}{1.12} - \frac{900}{1.12^2} - \frac{900}{1.12^3} - \frac{900}{1.12^4} +  \frac{600}{1.12^5}\\\\\displaystyle PV_{new} = -10,393.16

As the present worth of the new machine is lower, the best decision for the company is to purchase the new machine and sale the old machine.

Delaying this will incur in higher maintenance cost (1,500 - 900)

and a lower recovery value (4,000 - 2,000)

As there is no cost saving for delaying the purchase, it should be made immediately.

8 0
3 years ago
Peter's Audio has a yield to maturity on its debt of 7.8 percent, a cost of equity of 12.4 percent, and a cost of preferred stoc
nadezda [96]

Answer:

WACC = 9.22%

Explanation:

after tax cost of debt = 7.8% x (1 - 34%) = 5.148%

Re = 12.4%

cost of preferred stock = 8%

total value:

105,000 common stocks x $22 = $2,310,000

25,000 preferred stocks x $45 = $1,125,00

$1,500,000 bonds x 0.98 = $1,470,000

total value = $4,905,000

capital structure:

common stocks = $2,310 / $4,905 = 47.09%

preferred stocks = $1,125,00 / $4,905 = 22.94%

debt = $1,470,00 / $4,905 = 29.97%

WACC = (47.09% x 0.124) + (22.94% x 0.08) + (29.97% x 0.05148) = 9.22%

8 0
3 years ago
Assume that Zonk is a potential leveraged buyout candidate. Assume that the buyer intends to put in place a capital structure th
vekshin1

Answer:

A.8.85%

Explanation:

Computation to determine the weighted average cost of capital for Zonk based on the new capital structure.

First step is to calculate the Cost of equity capital using this formula

Cost of equity capital = Risk free rate + (Beta*Market premium)

Let plug in the formula

Cost of equity capital = 2.3% + (1.13*5.3%)

Cost of equity capital=8.28%

Now let determine theWeighted average cost capital

Weighted average cost capital = [.70*.14*(1-.35)]+(.30*.0828)

Weighted average cost capital= [.70*.14*.65]+.02484

Weighted average cost capital=0.0637+.02484

Weighted average cost capital= .0885*100

Weighted average cost capital= 8.85%

Therefore the weighted average cost of capital for Zonk based on the new capital structure is 8.85%

4 0
3 years ago
Bill Dukes has $100,000 invested in a 2-stock portfolio. $32,500 is invested in Stock X and the remainder is invested in Stock Y
pshichka [43]

Answer:

0.98

Explanation:

Computation for Bill Duke portfolio's beta

First step is to find the Investment in Y which is:

Investment in Y=100,000-35,000

=$65,000

Second step is to calculate for the Portfolio beta using this formula

Portfolio beta=Respective beta*Respective Investment weight

Portfolio beta =(35,000/100,000*1.5)+(65,000/100,000*0.7)

Portfolio beta=(0.35*1.5) +(0.65*0.7)

Portfolio beta =0.525 +0.455

Portfolio beta=0.98

Therefore the Portfolio Beta will be 0.98

7 0
3 years ago
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