Question
The following information about the operations of Hancock Company is available. Annual sales $185 million Cost of goods sold $125 million Average accounts receivable $25
The following information about the operations of Hancock Company is available.
Annual sales $185 million Cost of goods sold $125 million Average accounts receivable $25 million Average accounts payable $15 million Average inventory $30 million Cost of capital 12%
A) Find the NPV of its operating cycle. (B) What is the new NPV if Hancock can delay the payments by 2 days and make the collections 2 days earlier? By comparing the answers to (A) and (B), can you tell if the company made the right move?
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A Course In Derivative Securities
Authors: Kerry Back
2005th Edition
3540253734, 978-3540253730
