Blog

The period of time that extends from the day a credit sale is made until the day the bank credits the seller’s account with the payment for that sale is known as the _____ period.

What is the standard deviation of the returns on a portfolio that is invested in Stocks A, B, and C? Twenty percent of the portfolio is invested in Stock A and 35 percent is invested in Stock C. State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Stock C Boom .04 .17 .09 .09 Normal .81 .08 .06 .08 Recession .15 −.24 .02 −.13

You are the manager of a project that has a degree of operating leverage of 1.84 and a required return of 15 percent. Due to the current state of the economy, you expect unit sales to decrease by 3.5 percent next year. What change should you expect in the operating cash flows next year given your sales prediction?

You own a stock that had returns of 10.48 percent, −7.26 percent,23.64 percent, and 16.06 percent over the past four years. What was the geometric average return for this stock?

Mikulec Toys has an inventory turnover of 9.1 and an accounts payable turnover of 10.6. The accounts receivable period is 32.8 days. What is the length of the cash cycle?

What is the expected return on a portfolio that is equally weighted between Stocks M and N given the following information? State of Economy Probability of State of Economy Rate of Return if State Occurs Stock M Stock N Boom .13 .18 −.14 Normal .82 .06 .06 Recession .05 −.14 .18

As of the beginning of the quarter, Callahan’s had a cash balance of $710. During the quarter, the company collected $1,860 from customers and paid suppliers $1,520. The company also paid a loan payment of $320 and a tax payment of $510. What is Callahan’s cash balance at the end of the quarter?

A project has an initial cost of $7,900 and cash inflows of $2,100, $3,140, $3,800, and $4,500 per year over the next four years, respectively. What is the payback period?

A project has cash flows of −$152,000, $60,800, $62,300, and $75,000 for Years 0 to 3, respectively. The required rate of return is 13 percent. What is the profitability index? Should you accept or reject the project based on this index value?

Bubbly Waters currently sells 530 Class A spas, 680 Class C spas, and 430 deluxe model spas each year. The firm is considering adding a mid-class spa and expects that if it does, it can sell 605 units per year. However, if the new spa is added, Class A sales are expected to decline to 340 units while the Class C sales are expected to increase to 705. The sales of the deluxe model will not be affected. Class A spas sell for an average of $16,500 each. Class C spas are priced at $8,300 and the deluxe models sellfor $19,300 each. The new mid-range spa will sell for $10,300. What annual sales figure should you use in your analysis?