Question: What should be entered into part A: Years 1 - Infinity: i have the admin costs, there are no bad debts, but what is the
What should be entered into part A: Years Infinity: i have the admin costs, there are no bad debts, but what is the contribution margin, the tax on above and the total cash flow. Also, there is a part B that asks for the Net Present Value: i need to know the present cash inflows, the present cash outflows, and what the PMTN IYR and PV is so that I can calculate the NPV I would appreciate these answers so I could continue on to parts C and D Thank You I have all the answers for Part A detailed support of the above numbers, im just not sure where to plug them in at thank you for your help
A company with annual sales of $ is considering changing its payment terms from net to net to encourage customers to pay more promptly. The company forecasts that customers would respond by paying on day rather than day as at present assume a day year but would decrease their purchases by $ per year. The company also forecasts that its idle cash balance would decrease by $ and administrative costs would be reduced by $ per year. The company's variable costs average of sale: it is in the marginal tax bracket, and it has an cost of capital.
Required:
A Calculate the incremental cash flows associated with accepting this proposal, and
organize your cash flows into a cash flow spreadsheet of the type demonstrated in
chapter of the textbook.
B Calculate the proposal's Net Present Value.
C Calculate the proposal's Internal Rate of Return.
D Calculate the proposal's Net Annual Benefit.
E Explain whether the firm should shorten its payment terms or not.
Your answers to this openended assignment should be
placed in the space below this line.
Detailed support for above numbers:
Other WC change given in problem
Other WC change given in problem
B Present value of cash inflows
Present value of cash outflows
Net present value
C Annual cash outflow
Investment in AR
Internal rate of return
D Allowed annual cost
Actual annual cost
Net annual benefit
E Double click and put your answer here.
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