Chapter 14 3 Suppose That Tucker Industries Has Annual

58.

PNB Cos. has sales of $250,000 and cost of goods sold of $120,000. The firm had a

beginning inventory of $19,000 and an ending inventory of $13,000. What is the length of

the days’ sales in inventory?

59.

Suppose that Tucker Industries has annual sales of $5 million, cost of goods sold of $2.78

million, average inventories of $1,125,000, and average accounts receivable of $500,000.

Assuming that all of Tucker’s sales are on credit, what will be the firm’s operating cycle?

60.

Suppose that Mack Industries has annual sales of $10 million, cost of goods sold of $6.5

million, average inventories of $1 million, and average accounts receivable of $600,000.

Assuming that all of Mack’s sales are on credit, what will be the firm’s operating cycle?

61.

Suppose that Sam Industries has annual sales of $2 million, cost of goods sold of

$950,000, average inventories of $45,000, and average accounts receivable of $90,000.

Assuming that all of Sam’s sales are on credit, what will be the firm’s operating cycle?

62.

Suppose that Freddy’s Fries has annual sales of $500,000, cost of goods sold of $375,000,

average inventories of $9,000, and average accounts receivable of $25,000. Assuming that

all of Freddy’s sales are on credit, what will be the firm’s operating cycle?

63.

Suppose that Farrah’s Hair Care has annual sales of $100,000, cost of goods sold of

$65,000, average inventories of $2,000, and average accounts receivable of $5,000.

Assuming that all of Farrah’s sales are on credit, what will be the firm’s operating cycle?

64.

Suppose that Freddie’s Fries has annual sales of $500,000; cost of goods sold of $375,000;

average inventories of $9,000; average accounts receivable of $25,000; and an average

accounts payable balance of $20,000. Assuming that all of Freddie’s sales are on credit,

what will be the firm’s cash cycle?

65.

Suppose that Jamie’s Jams has annual sales of $900,000; cost of goods sold of $600,000;

average inventories of $11,000; average accounts receivable of $50,000; and an average

accounts payable balance of $30,000. Assuming that all of Jamie’s sales are on credit,

what will be the firm’s cash cycle?

66.

Suppose that Darlene’s Donuts has annual sales of $200,000; cost of goods sold of

$90,000; average inventories of $4,000; average accounts receivable of $10,000; and an

average accounts payable balance of $7,000. Assuming that all of Darlene’s sales are on

credit, what will be the firm’s cash cycle?

67.

Suppose your firm is seeking a 7-year, amortizing $100,000 loan with annual payments

and your bank is offering you the choice between a $110,000 loan with a $10,000

compensating balance and a $100,000 loan without a compensating balance. If the

interest rate on the $100,000 loan is 7 percent, how low would the interest rate on the loan

with the compensating balance have to be in order for you to choose it?

68.

Suppose your firm is seeking a five-year, amortizing $900,000 loan with annual payments

and your bank is offering you the choice between a $950,000 loan with a $50,000

compensating balance and a $900,000 loan without a compensating balance. If the

interest rate on the $900,000 loan is 9.5 percent, how low would the interest rate on the

loan with the compensating balance have to be in order for you to choose it?

69.

Suppose your firm is seeking a 3-year, amortizing $300,000 loan with annual payments

and your bank is offering you the choice between a $305,000 loan with a $5,000

compensating balance and a $300,000 loan without a compensating balance. If the

interest rate on the $300,000 loan is 8 percent, how low would the interest rate on the loan

with the compensating balance have to be in order for you to choose it?

70.

Rose Resources faces a smooth annual demand for cash of $10 million; incurs transaction

costs of $325 every time they sell marketable securities; and can earn 3.9 percent on their

marketable securities. What will be their optimal cash replenishment level?

71.

Rose N More Resources faces a smooth annual demand for cash of $50 million; incurs

transaction costs of $350 every time they sell marketable securities, and can earn 5.2

percent on their marketable securities. What will be their optimal cash replenishment

level?

72.

Reese’s Resources faces a smooth annual demand for cash of $15 million; incurs

transaction costs of $125 every time they sell marketable securities, and can earn 4.5

percent on their marketable securities. What will be their optimal cash replenishment

level?

73.

Hollywood Shoes would like to maintain their cash account at a minimum level of $50,000,

but expects the standard deviation in net daily cash flows to be $4,000; the effective

annual rate on marketable securities to be 6 percent per year; and the trading cost per

sale or purchase of marketable securities to be $100 per transaction. What will be their

optimal cash return point?

74.

Happy Feet would like to maintain their cash account at a minimum level of $75,000, but

expects the standard deviation in net daily cash flows to be $5,000; the effective annual

rate on marketable securities to be 7 percent per year; and the trading cost per sale or

purchase of marketable securities to be $150 per transaction. What will be their optimal

cash return point?

75.

BOGO Shoes would like to maintain their cash account at a minimum level of $100,000,

but expects the standard deviation in net daily cash flows to be $7,000; the effective

annual rate on marketable securities to be 6.5 percent per year; and the trading cost per

sale or purchase of marketable securities to be $175 per transaction. What will be their