Is the us dollar selling at a premium or a discount


CHAPTER 18

3. Changes in the Operating Cycle [LO1] Indicate the effect that the following will have on the operating cycle. Use the letter I to indicate an increase, the letter Dfor a decrease, and the letter N for no change:

a. Average receivables goes up.

b. Credit repayment times for customers are increased.

c. Inventory turnover goes from 3 times to 6 times.

d. Payables turnover goes from 6 times to 11 times.

e. Receivables turnover goes from 7 times to 9 times.

f. Payments to suppliers are accelerated.

11. Calculating the Cash Budget [LO3] Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2015:

 

April

May

June

Credit sales

$374,400

$349,500

$420,500

Credit purchases

148,900

169,300

200,300

Cash Disbursements

 

 

 

Wages,taxes and expenses

54,340

70,300

75,170

Interest

12,580

12,580

12,580

Equipment purchase

88,800

135,000

0

CHAPTER 20

8. Size of Accounts Receivable [LO1] The Arizona Bay Corporation sells on credit terms of net 30. Its accounts are, on average, four days past due. If annual credit sales are $9.75 million, what is the company's balance sheet amount in accounts receivable?

14. Credit Policy Evaluation [LO2] The Snedecker Corporation is considering a change in its cash-only policy. The new terms would be net one period. Based on the following information, determine if the company should proceed or not. Therequired return is 2.5 percent per period.

 

Current Policy

new policy

Price per unit

$73

$75

Cost per unit

$38

$38

Unit Sales per month

3,280

3,390

CHAPTER 21

4. Using Spot and Forward Exchange Rates [LO1] Suppose the spot exchange rate for the Canadian dollar is Can$1.09 and the six-month forward rate is Can$1.11.

a. Which is worth more, a U.S. dollar or a Canadian dollar?

b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.50? Why might the beer actually sell at a different price in the United States?

c. Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar?

d. Which currency is expected to appreciate in value?

e. Which country do you think has higher interest rates-the United States or Canada? Explain.

7. Interest Rates and Arbitrage [LO2] The treasurer of a major U.S. firm has $30 million to invest for three months. The interest rate in the United States is .31 percent per month.

The interest rate in Great Britain is .34 percent per month. The spot exchange rate is £.573, and the three-month forward rate is £.575. Ignoring transaction costs, in which country would the treasurer want to invest the company's funds? Why?

CHAPTER 26
1. Calculating Synergy [LO3] Pearl, Inc., has offered $357 million cash for all of the common stock in Jam Corporation. Based on recent market information, Jam is worth $319 million as an independent operation. If the merger makes economic sense for Pearl, what is the minimum estimated value of the synergistic benefits from the merger?

2. Balance Sheets for Mergers [LO2] Consider the following premerger information about Firm X and Firm Y:

 

Firm X

Firm Y

Total Earnings

$87,000

$11,000

Shares outstanding

35,000

12,000

Per-Share values :

 

 

Market

$57

$19

Book

$7

$3

Solution Preview :

Prepared by a verified Expert
Operation Management: Is the us dollar selling at a premium or a discount
Reference No:- TGS02665019

Now Priced at $50 (50% Discount)

Recommended (97%)

Rated (4.9/5)