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##### Liberty Bus1320 (text book assignments +discussion)

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**Question**

Fancy Distributing Company of Atlanta sells;fans and heaters to retail outlets throughout the Southeast. Joe Fancy, the;president of the company, is thinking about changing the firm?s credit policy;to attract customers away from competitors. The present policy calls for 3/15;net 30 cash discount. The new policy would call for a 5/10, net 45 cash;discount. Currently, 45 percent of Fancy customers are taking the discount, and;it is anticipated that this number would go up to 65 percent with the new;discount policy. It is further anticipated that annual sales would increase;from a level of $150,000 to $575,000 as a result of the change in the cash;discount policy.;The increased sales would also affect the;inventory level. The average inventory carried by Logan is based on a;determination of an EOQ. Assume sales of fans and heaters increase from 10,500;to 22,750 units. The ordering cost for each order is $175, and the carrying;cost per unit is $2.50 (these values will not change with the discount). The;average inventory is based on EOQ/2. Each inventory has an average cost of $12.50.;Cost of goods sold is equal to 60 percent;of net sales, general and administrative expenses are 15 percent of net sales;and interest payments of 14 percent will only be necessary for the increase in;the accounts receivable and inventory balances. Taxes will be 34 percent of;before-tax income.;a.;Compute the accounts receivable;balance before and after the change in the cash discount policy. Use the net;sales (total sales minus cash discounts) to determine the average daily sales.;b.;Determine the EOQ before and;after the change in the cash discount policy. Translate this into average;inventory (in units and dollars) before and after the change in the cash;discount policy.;c.;Compute the following income;statement.;d.;Should the new cash discount;policy be utilized? Briefly comment.COMPREHENSIVE PROBLEM 3 ? GENERAL WEAPONS;INC.General;Weapons, Inc. (Comprehensive time value of money)Mr.;Rambo, President of General Weapons, Inc., was pleased to hear that he had;three offers from major defense companies for his latest missile firing;automatic ejector. He will use a discount rate of 10 percent to evaluate each;offer.;Offer;I;$1,600,000 now plus $825,000 from the end;of years 6 through 15. Also if the product goes over $60 million in cumulative;sales by the end of year 15, he will receive an additional $3,000,000. Rambo;thought there was an 80 percent probability this would happen.;Offer;II;Thirty percent of the buyer?s gross;margin for the next four years. The buyer in this case is Air Defense, Inc.;(ADI). Its gross margin is 70 percent. Sales for year 1 are projected to be $3.75;million and then grow by 35 percent per year. This amount is paid today and;is not discounted.;Offer;III;A trust fund would be set up for the next;four years. At the end of that period, Rambo would receive the proceeds (and;discount them back to the present at;10 percent). The trust fund called for semiannual payments for the next four;years of $150,000 (a total of $300,000 per year). The payments would start;immediately. Since the payments are coming at the beginning of each period;instead of the end, this is an annuity due. To look up the future value of;the annuity due in the tables, add 1 to n, where n is the number of periods;and subtract 1 from the value in the table. Assume the annual interest rate;on this annuity is 10 percent annually (5 percent semiannually). Determine the;present value of the trust fund?s final value.;Required;Find the present value of each of;the three offers and then indicate which one has the highest present value.;="msoplaintext">;Module 6;Group Discussion;Board forum;By Module/Week 6, students will be assigned to a group in;the Group Discussion Board. A minimum 1,000-word essay will be worked on as a;group, and then posted to the Discussion Board for everyone to see. Replies are;not necessary, however, they are strongly encouraged. Students are to briefly;describe how the Bible is related to the topics covered in the course. An;integration of the Bible must be explicitly shown, in relation to a course;topic, in order to receive points. In addition, at least two other outside;scholarly sources (the text may count as one) should be used to substantiate;the group?s position. This assignment must be submitted to SafeAssign, as well;as the Discussion Board by one of the group members. Individual projects are;not allowed. Social loafing is not acceptable, and will result in a student;earning a grade of 0="msoplaintext">

Paper#51235 | Written in 18-Jul-2015

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