Part A: Cash Flow of Accounts Receivable
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Myers and Associates, a famous law office in California, bills its clients on the first of each month. Clients pay in the following fashion:40% pay at the end of the first month, 5% pay at the end of the fourth month, 5% default on their bills. Myers wants to know the anticipated cash flow fro the first quarter of 2009 if the past billings follow this same pattern. The actual and anticipated billings are as follows.
Fourth Quarter Actual Billings: Oct. $392,000, Nov. $323,000, Dec. $296,000
First Quarter Anticipated Billings: Jan. $340,000, Feb. $360,000, Mar. $408,000
Part B: Straight Bank Loan
Right Bank offers EAR loans of 9.38% and requires a monthly payment on all loans?
a. What is the APR for these monthly loans?
b. What is the monthly payment for the following?
1.A loan of $200,000 for six years 2. A loan for $450,000 for twelve years 3. A loan for $1,250,000 for thirty years
Part C: Selling Bonds
Astro Investment Bank has the following bond deals under way:
Company Bond Yield Commission Coupon Rate Maturity
Gravity Belts 8.0% 2%of sale price 8.0% 10 years
Invisible Rays 9.0% 3%of sale price 12.0% 10 years
Solar Glasses 7.0% 2%of sale price 5.0% 20 years
Space Chips 12.0% 4%of sale price 0% 20 years