n (a) (b) (c) Luxury Travel Ltd is a company providing travel-related services to its customers. It

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(a) (b) (c) Luxury Travel Ltd is a company providing travel-related services to its customers. It has forecasted its total funding requirements for the coming year as shown in the table below: Month January February March April May June July August September October November December Total funding requirements (S$) (ii) A conservative funding strategy. 90,000 40,000 60,000 40,000 60,000 100,000 60,000 50,000 60,000 50,000 100,000 160,000 The company was informed by its bank that short-term loans cost 4.5%p.a. and long- term loans cost 7.0%p.a.. Calculate the total financing cost (to 2 decimal places) if it adopts the following strategies: (i) An aggressive funding strategy. (3 marks) (3 marks) (iii) Based on the funding requirements indicated in the table, state a possible reason for the company's peak requirements in certain months. (2 marks) Starbright Company's CEO, commented that the return from holding cash is zero or very low. He wanted the finance manager to reduce the level of cash holding from the current $200,000 to only $10,000. (i) Advise the CEO on the THREE (3) reasons why a firm needs to hold cash. (3 marks) (ii) Suggest an alternative where the firm can increase its returns and yet meet its liquidity requirements. Explain. (3 marks) Discuss how a finance manager can make use of the 5Cs in granting credit to customers. Which C is the most important when evaluating additional credit request from existing customers? Explain your choice. (6 marks) (a) (b) (c) Luxury Travel Ltd is a company providing travel-related services to its customers. It has forecasted its total funding requirements for the coming year as shown in the table below: Month January February March April May June July August September October November December Total funding requirements (S$) (ii) A conservative funding strategy. 90,000 40,000 60,000 40,000 60,000 100,000 60,000 50,000 60,000 50,000 100,000 160,000 The company was informed by its bank that short-term loans cost 4.5%p.a. and long- term loans cost 7.0%p.a.. Calculate the total financing cost (to 2 decimal places) if it adopts the following strategies: (i) An aggressive funding strategy. (3 marks) (3 marks) (iii) Based on the funding requirements indicated in the table, state a possible reason for the company's peak requirements in certain months. (2 marks) Starbright Company's CEO, commented that the return from holding cash is zero or very low. He wanted the finance manager to reduce the level of cash holding from the current $200,000 to only $10,000. (i) Advise the CEO on the THREE (3) reasons why a firm needs to hold cash. (3 marks) (ii) Suggest an alternative where the firm can increase its returns and yet meet its liquidity requirements. Explain. (3 marks) Discuss how a finance manager can make use of the 5Cs in granting credit to customers. Which C is the most important when evaluating additional credit request from existing customers? Explain your choice. (6 marks)

Answer rating: 100% (QA)

a i An aggressive funding strategy The company would take shortterm loans for all the months except for October November and December The total financ... View the full answer