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Saint leo MBA560 test 7

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solution


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Question;Problem 1. Ortiz Manufacturing is considering developing;and marketing one of two new products, A and B. It has accumulated the;following information about the two products;Required;1) Which of these items are;relevant to Ortiz's decision about which of these products it will;launch?Problem;2. Mae Lee owns a small;retail store in Cairo, Georgia. The following summary information regarding;expectations for the month of January is provided: As of December 31 there is;$500 in the bank and the balance in accounts receivable is $2,500. Budgeted;cash and credit sales for January are $3,000 and $2,000, respectively. Ninety;percent of credit sales are collected in the month of sale and the remainder is;collected in the following month. Mae's suppliers do not extend credit. Cash;payments for January are expected to be $12,000. Mae has a line of credit that;enables the store to borrow funds on demand. However, funds must be borrowed on;the first day of the month and interest paid in cash on the last day of the;month. Mae desires to maintain a $500 cash balance before consideration is;given to the payment of interest. Mae's bank charges annual interest of 12% per;year.Required;1) Compute the amount of funds that needs to be borrowed.2);Compute the amount of interest expense that will appear on the January 31 pro;forma income statement.

 

Paper#44061 | Written in 18-Jul-2015

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