1 Googl BUSNS Googk Googk R55 Sign ir poseid Googh Sign ir M is it sar - o Findit Pri x Gitmar Gitma New t Googk Quarte Quarte googl Start file/CyUsers/manaw/AppData/Local/Packages/microsoft.windowscommunicationsapps Bwelyb3d8bbwe/Local State/Files/S0/10683/Atachments/Principles o fManagerial Financethedition(13728).pdf Polly Umrigar, treasurer of Pohutakawa Limited, carefu Optionsv X Find on page No results Fit to page Read aloud Add notes + Page view 720 of 095 Contents - chapter iteen Cument abties managemen Case Selecting Pohutakawa Limited's financing strategy and unsecured short-term borrowing arrangements Pely gar r Pulakawa Limited, careully t of the Menali Total fundh Math Total fnds $1 500 000 ly Augst s9 000 000 luane Februan 100 000 Ap 7s00.000 10 s00000 Decmber 1500000 In addition, Pelly expects short-term financing costs of about 6 % and long-term financing costs of about 10 % daring that period. She developed the following three financial Strategy I-Aggresive: Finance seasonal needs with shortterm funds and permanent needs eden CrcENatie: ncE AB amount eaeal to the peak need with kong term fands and use short-term funds only in an emergey. nd rance the remaining wi irements with short-lerm funds nds Using the data on the firm's total funds requirements, Polly estimated the average annual dng term inancang requirements for each strategy in the ccming year, as do wng Strategy 2 Strategy aggresse Stratgy 2 onsorvathve Type of financing adoff 4 500 000 1500 00 s0 s00 000 Long tem that, along with spoataneous financing from term everralt aang wi vr h a do r ora 0day perod during the year The oinl Dell Update 2.5% ready to instal Vew Details of her analysis, Polly estimates that Pobutakawa will borrow $900 000 on average during the year, regardless of the financing strategy and borrowing arrangements _ chosen O Type here to search 1 Googl BUSNS Googk Googk R55 Sign ir poseid Googh Sign ir M is it sar - o Findit Pri x Gitmar Gitma New t Googk Quarte Quarte googl Start file/CyUsers/manaw/AppData/Local/Packages/microsoft.windowscommunicationsapps Bwelyb3d8bbwe/Local State/Files/S0/10683/Atachments/Principles o fManagerial Financethedition(13728).pdf Polly Umrigar, treasurer of Pohutakawa Limited, carefu Optionsv X Find on page No results Fit to page Read aloud Add notes + Page view 721 of 095 Contents part five Shotterm foaecins dechoe Required e the total annual cost of the three possible strateries. s current assets to total S6 million throughout the year, 2 Auumine the firm expects t rrking aplal under each of the linancing strategies. s W C 4 ind the offe ar 5 If the firm expects te borrow an average of $900 000, which borrowing arrangement would you recommend to the company? rPoulakawa Lad Spreadsheet exercise Making a comparison of loan terms for your company machines Management doides to ur $200 000 frmach of banky dclaide 60 ay interest rate was set at 2 above the prime rate cn First Adelaide's fined rute note ver the day period, the rate of interest on this note will remain at the 2% premium over First Perth sets its interest i The rate charged over the 60 days will vary directly with the prime rate. te at 1.5% above the prime rate on its floating rate note. Required preadsheet to calculate the folowing for the First Adelaide loan: dlar interest cost cn the loan. (Assume a 65-day year) l Assume that the loan is rolled over each 60 days throughout the year under identical alcalate the effective anesal rate of interest on fixed rate, 60-day First Adelaide note. fellowing for the First Perth loan: 2 Now, create a sercadshot to calculate Calculate the initial interest rate. r 1 ds drops to 7.25% , calculate the interest rate for the first 30 days and the second 30 days the loan Dell Update k ander the same ready to instal Vew Details Which lean would you choose, and why? _ nsMal O Type here to search 1 Googl BUSNS Googk Googk R55 Sign ir poseid Googh Sign ir M is it sar - o Findit Pri x Gitmar Gitma New t Googk Quarte Quarte googl Start file/CyUsers/manaw/AppData/Local/Packages/microsoft.windowscommunicationsapps Bwelyb3d8bbwe/Local State/Files/S0/10683/Atachments/Principles o fManagerial Financethedition(13728).pdf Polly Umrigar, treasurer of Pohutakawa Limited, carefu Optionsv X Find on page No results Fit to page Read aloud Add notes + Page view 720 of 095 Contents - chapter iteen Cument abties managemen Case Selecting Pohutakawa Limited's financing strategy and unsecured short-term borrowing arrangements Pely gar r Pulakawa Limited, careully t of the Menali Total fundh Math Total fnds $1 500 000 ly Augst s9 000 000 luane Februan 100 000 Ap 7s00.000 10 s00000 Decmber 1500000 In addition, Pelly expects short-term financing costs of about 6 % and long-term financing costs of about 10 % daring that period. She developed the following three financial Strategy I-Aggresive: Finance seasonal needs with shortterm funds and permanent needs eden CrcENatie: ncE AB amount eaeal to the peak need with kong term fands and use short-term funds only in an emergey. nd rance the remaining wi irements with short-lerm funds nds Using the data on the firm's total funds requirements, Polly estimated the average annual dng term inancang requirements for each strategy in the ccming year, as do wng Strategy 2 Strategy aggresse Stratgy 2 onsorvathve Type of financing adoff 4 500 000 1500 00 s0 s00 000 Long tem that, along with spoataneous financing from term everralt aang wi vr h a do r ora 0day perod during the year The oinl Dell Update 2.5% ready to instal Vew Details of her analysis, Polly estimates that Pobutakawa will borrow $900 000 on average during the year, regardless of the financing strategy and borrowing arrangements _ chosen O Type here to search 1 Googl BUSNS Googk Googk R55 Sign ir poseid Googh Sign ir M is it sar - o Findit Pri x Gitmar Gitma New t Googk Quarte Quarte googl Start file/CyUsers/manaw/AppData/Local/Packages/microsoft.windowscommunicationsapps Bwelyb3d8bbwe/Local State/Files/S0/10683/Atachments/Principles o fManagerial Financethedition(13728).pdf Polly Umrigar, treasurer of Pohutakawa Limited, carefu Optionsv X Find on page No results Fit to page Read aloud Add notes + Page view 721 of 095 Contents part five Shotterm foaecins dechoe Required e the total annual cost of the three possible strateries. s current assets to total S6 million throughout the year, 2 Auumine the firm expects t rrking aplal under each of the linancing strategies. s W C 4 ind the offe ar 5 If the firm expects te borrow an average of $900 000, which borrowing arrangement would you recommend to the company? rPoulakawa Lad Spreadsheet exercise Making a comparison of loan terms for your company machines Management doides to ur $200 000 frmach of banky dclaide 60 ay interest rate was set at 2 above the prime rate cn First Adelaide's fined rute note ver the day period, the rate of interest on this note will remain at the 2% premium over First Perth sets its interest i The rate charged over the 60 days will vary directly with the prime rate. te at 1.5% above the prime rate on its floating rate note. Required preadsheet to calculate the folowing for the First Adelaide loan: dlar interest cost cn the loan. (Assume a 65-day year) l Assume that the loan is rolled over each 60 days throughout the year under identical alcalate the effective anesal rate of interest on fixed rate, 60-day First Adelaide note. fellowing for the First Perth loan: 2 Now, create a sercadshot to calculate Calculate the initial interest rate. r 1 ds drops to 7.25% , calculate the interest rate for the first 30 days and the second 30 days the loan Dell Update k ander the same ready to instal Vew Details Which lean would you choose, and why? _ nsMal O Type here to search