Compute the The Inventory Conversion Period Business Questions

Question Description

I’m working on a business question and need an explanation to help me study.

Question 57

Company A’s most recent dividend was $1.40, dividend growth is expected to be 3% per year, and investors require 9%. What should the stock’s price be?

Question 56

If investors require a 7% annual return on a 10% preferred stock with a par value of $100, which of the following falls closest to where the stock’s price should be?

Question 55

What is the yield to maturity (YTM) on a bond that was purchased for $987.65, has a coupon rate of 8%, makes one payment annually, will mature in 10 years, and has a $1,000 par value?

Question 54

What is the price of a bond with a coupon payment of $100 annually, 10 years to maturity, a $1,000 par value and a yield of 11%?

Question 48

What is the present value of an annuity due with a payment of $500 per year at an interest rate of 9% for 15 years?

Question 47

Hannah has $1,000 in her bank account which will earn 4% each year forever. If she withdraws only $10 a year from the annual payment, what is the growth rate of this perpetuity?

Question 46

An investment costs $3,000 today and will result in a cash payment of $6,000 in five years. Which statement about this investment is true, assuming an interest rate of 10%?

Question 36

Using the capital asset pricing model (CAPM), what is the cost of equity if the risk free rate is 4%, the market return is 6%, and beta is 1.2?

Question 35

A company has 10 million shares of common stock selling at $50 a share. It pays a dividend of $4 this year and the dividend is growing at 5% annually.

According to the Dividend Discount Model (DDM), what is the cost of equity?

Question 34

What is the component cost of preferred stock for a company that has $20 million in preferred stock ($75 par value) that sells for $70 a share, pays a dividend of $6.50 each year, and has an effective tax rate of 30%?

Question 33

What is the cost of debt if a company has $100,000 of debt with an annual interest rate of 5% and an income tax rate of 30%?

Question 28

What is the cash conversion cycle for XYZ Company, based on the following information?Inventory: $20,000
Daily purchases: $1,000
Receivables: $12,000
Daily revenue: $4,000
Payables: $8,000
Daily purchases: $800

Question 27

What is the inventory conversion period for a company that has $40,000 in beginning inventory and $50,000 in ending inventory; and has $1,825,000 in cost of goods sold for the year?

Question 26

What is the payables conversion period for a company that has $42,000 in payables, and purchases $2,000 in inventory per day, and has an average daily revenue for $3,000?

Question 25

What is the operating cycle of a company that has $30,000 in inventory, sells $2,000 worth of goods each day, has $75,000 in receivables, and has an average daily revenue of $3,000?

Question 24

A company has $30,000 in cash, $150,000 in inventory, and $50,000 in Accounts Receivable (A/R). Their Accounts Payable (A/P) is stable at $25,000. What is this company’s permanent funding need?

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