List and describe four actions a firm can take to accelerate the collection of cash from sales. For each action listed, describe the potential costs involved with the action.
Question #2
Consider the following potential investment, which has the same risk as the firm's other projects:
Time Cash Flow
0 -$75,000
1 $10,000
2 $16,000
3 $18,000
4 $18,000
5 $18,000
6 $20,000
a) What are the investment's payback period, IRR, and NPV, assuming the firm's WACC is 10%.
b) If the firm requires a payback period of less than 5 years, should this project be accepted?
c) Based on the IRR and NPV rules, should this project be accepted?
d) Which of the decision rules (payback, NPV, or IRR) do you think is the best rule for a controller to use when evaluating projects? Be sure to justify your choice.
Question #3
List and describe one advantage and one disadvantage of raising external funds with debt, preferred stock, and common stock.
Question #4
a) What is the controller's role in strategy implementation? Be sure to provide specific examples in your answer.
b) How has the controller's role evolved since the passage of the Sarbanes Oxley Act?