Sheila's Society Clothing Manufacturer has collection centres around the country to speed up cash collections. The company also makes its disbursements from remote disbursement centres, so cheques written by Sheila's take longer to clear the bank. Collection time has been reduced by two days and a half days and disbursement time has been increased by one and a half days because of these policies. Excess funds are being invested in short-term instruments yielding 5 percent per annum. 0. If the firm has $4.30 million per day in collections and $3.30 million per day in disbursements, how many dollars has the cash management system freed up? (Enter the answer in dollors not in millions.) Freed-up funds $ b. How much can Shella's earn per year on short-term investments made possible by the freed-up cash? (Enter the onswer in dollars not in millions.) Interest on freed-up cash $ Hunter Petroleum Corporation paid a \$2 dividend last year. The dividend is expected to grow at a constant rate of 5 percent forever The required rate of return is 15 percent (this will also serve as the discount rate in this problem). (Use o Financial calculotor to orrive. at the answers, ) 0. Compute the anticipated value of the dividends for the next three years. (Do not round intermediote calculations. Round the final onswer to 3 decimal places.) b. Caiculate the present value of each of the anticipated dividends at a discount rate of 15 percent. (Do not round intermediate calculations. Round the final answers to 3 decimal pleces.) c. Compute the price of the stock at the end of the third year (P3)( Do not round intermediate calculotions. Round the final ansiwer to 2 decimal pleces.) P3=keao4 ( D4 is equal to D3 times 105) Price of the stock d. Calculate the present value of the year 3 stock price at a discount rate of 15 percent (Do not round intermediate colculations. Round the final answer to 3 decimal ploces.) Sheila's Society Clothing Manufacturer has collection centres around the country to speed up cash collections. The company also makes its disbursements from remote disbursement centres, so cheques written by Sheila's take longer to clear the bank. Collection time has been reduced by two days and a half days and disbursement time has been increased by one and a half days because of these policies. Excess funds are being invested in short-term instruments yielding 5 percent per annum. 0. If the firm has $4.30 million per day in collections and $3.30 million per day in disbursements, how many dollars has the cash management system freed up? (Enter the answer in dollors not in millions.) Freed-up funds $ b. How much can Shella's earn per year on short-term investments made possible by the freed-up cash? (Enter the onswer in dollars not in millions.) Interest on freed-up cash $ Hunter Petroleum Corporation paid a \$2 dividend last year. The dividend is expected to grow at a constant rate of 5 percent forever The required rate of return is 15 percent (this will also serve as the discount rate in this problem). (Use o Financial calculotor to orrive. at the answers, ) 0. Compute the anticipated value of the dividends for the next three years. (Do not round intermediote calculations. Round the final onswer to 3 decimal places.) b. Caiculate the present value of each of the anticipated dividends at a discount rate of 15 percent. (Do not round intermediate calculations. Round the final answers to 3 decimal pleces.) c. Compute the price of the stock at the end of the third year (P3)( Do not round intermediate calculotions. Round the final ansiwer to 2 decimal pleces.) P3=keao4 ( D4 is equal to D3 times 105) Price of the stock d. Calculate the present value of the year 3 stock price at a discount rate of 15 percent (Do not round intermediate colculations. Round the final answer to 3 decimal ploces.)
