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Average daily remittances are $5 million, and “extended disbursement float” adds 3 days to the disbursement schedule, how much should the firm be willing to pay for a cash management system if the firm earns 10% on excess funds.

Cash, accounts receivables, and inventory all move monthly in the same direction under level production.

 The Milling Corp. has developed a new type of widget. The local distributor expects to increase his sales by 20% over the past year due to this new development. Last year’s sales were $50,000 at a selling price of $100 per unit. The manager would like to cut costs as much as possible and comes to you for advice. Total ordering cost is $100 per order. Carrying cost is $5 per unit.   Access Excel here.A) What is the economic order quantity? (2 MARKS) B) What is the amount of average inventory? (1 MARK) C) How many orders will be made per year? (1 MARK) D) What is the total cost of this inventory decision? (2 MARKS) 

Agency theory would imply that conflicts are more likely to occur between management and shareholders when:

An issue of preferred stock is paying an annual dividend of $5. The growth rate for the firm’s common stock is 12%. What is the preferred stock price if the required rate of return is 10%?

Mountain Home Systems, Inc. is a well-known and reputable supplier of integrated circuits to manufacturers of telecommunications devices. The firm is currently debating whether to change its credit policy. Terms are currently 2/10, net 60 and would be changed to net 30. Currently, 60% of the customers on average pay at the end of the credit period (60 days) and the remaining customers would pay in 10 days to take advantage of the discount. Under the new policy, it is anticipated that customers will pay on average in 35 days and 50% of the customers will pay in 10 days to take advantage of the discount. All sales are credit sales and will remain so with the change of policy. Average annual sales of $8,000,000 a year are expected to fall to $6,000,000. Bad debt losses will drop from 3% of total sales to 2% of total sales. Variable production costs will remain at 80%. The opportunity cost of financing is 8%. Should Mountain Home Systems change its credit policy? Show all calculations. Access Excel Here.

Sales (75,000 units) $750,000 Variable costs 225,000 Contribution margin 525,000 Fixed manufacturing costs 187,500 Operating income 337,500 Interest 75,000 Earnings before taxes 262,500 Taxes (at 31%) 81,375 Net income $181,125 Shares outstanding 15,000  The Degree of Financial Leverage is:

Massa Machine Tool expects total sales of $10,000. The price per unit is $5. The firm estimates an ordering cost of $7.50 per order, with an inventory carrying cost of $0.70 per unit. What is the optimum order size?

The police receive a phone tip that Jeremiah David committed an armed robbery that was reported to the police two days before. The police seek a search warrant to search Mr. David’s apartment to look for the illicit fruits of the armed robbery. What standard will the court use to determine whether there is enough “probable cause” to satisfy the Fourth Amendment? 

The police believe that Jackson is an accomplice to a recent murder. The police obtain a valid search warrant to search Jackson’s apartment, which is located on the third floor of the apartment building. The warrant specifies that the police are entitled to search “the premises known as the third-floor apartment” at that address. When the police arrive, they search all of the rooms on the third floor of the building because they believe that they are all part of the same apartment. However, it turns out that one of the rooms on the third floor does not belong to Jackson and is a separate apartment. The police find incriminating evidence in that separate apartment. Is the search constitutional even though the police made a mistake in executing the warrant?