Problem 18.07 – Factoring Receivables
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
Given the average collection period and discount rate… find the effective annual rate.
Given the average collection period and discount rate… find the effective annual rate.
Given the projected sales for each quarter, projected sales increase, and the different payables periods… figure out the payment of accounts for a-c.
Given purchases from suppliers, payables period, expenses, interest and dividends, sales for the four quarters, and the projected first-quarter sales…  create the company’s cash outlays.
Given the sales budget for three months, the credit sales, accounts receivable, and uncollected sales… find the sales for the prior two months and the cash collections for the three months.
Given the balance sheet for the incorporation… figure out if the items are a source or use and then figure out the amount.
Given borrowing amount for credit arrangement, interest rate, the amount borrowed that must be deposited into a non-interest-bearing account… find the annual interest rate. Next, given the amount needed today and amount of months to repay it…. figure out the interest paid.
Given the revolving credit arrangement, interest rate per quarter, compensating balance, short-term investment… figure out the effective annual rate for the different borrowing amounts.
Given the fixed commitment line of credit, percent paid on funds borrowed, compensating balance, commitment fee, and the credit used… figure out the effective annual interest rates.
Given the discount interest loan information and the compensating balance… find the effective annual interest rate.