Gibson’s has sales for the year of $542,400, cost of goods sold equal to 80 percent of sales, and an average inventory of $80,400. The profit margin is 6 percent and the tax rate is 21 percent. How many days, on average, does it take the company to sell an inventory item? Assume 365 days per year.

A project has cash flows of −$129,000, $62,400, $54,800, and $41,800 for Years 0 to 3, respectively. The required rate of return is 12 percent. Based on the internal rate of return of _____ percent for this project, you should _____ the project.

Big Al’s Meat Market has annual sales of $549,000 and cost of goods sold of $372,400. The profit margin is 6 percent and the accounts payable period is 31.5 days. What is the average accounts payable balance? Assume 365 days per year.

The common stock of Alpha Manufacturers has a beta of 1.24 and an actual expected return of 13.25 percent. The risk-free rate of return is 3.7 percent and the market rate of return is 11.78 percent. Which one of the following statements is true given this information?

A five-year project has an initial fixed asset investment of $613,600, an initial net working capital investment of $22,200, and an annual operating cash flow of −$76,540. The fixed asset is fully depreciated over the life of the project and has no salvage value. The net working capital will be recovered when the project ends. The required return is 11.7 percent. What is the project’s equivalent annual cost, or EAC?

Decker’s is an all-equity financed chain of retail furniture stores. Furniture Fashions produces furniture and is the primary supplier to Decker’s. Decker’s has a beta of 1.62 as compared to Furniture Fashions’ beta of 1.43. The risk-free rate of return is 3.1 percent and the market risk premium is 7.6 percent. What discount rate should Decker’s use if it considers a project that involves the manufacturing of furniture?

Bretz Baskets would like to offer a special product to its best customers. However, the firm wants to limit its maximum potential loss on this product to the firm’s initial investment. The fixed costs are estimated at $3,600, the depreciation expense is $870, and the contribution margin per unit is $6.89. What is the minimum number of units the firm should pre-sell to ensure its potential loss does not exceed the desired level?

You are considering two independent projects. Project A has an initial cost of $125,000 and cash inflows of $46,000, $79,000, and $51,000 for Years 1 to 3, respectively. Project B costs $135,000 with expected cash inflows for Years 1 to 3 of $50,000, $30,000, and $100,000, respectively. The required return for both projects is 16 percent. Based on IRR, you should:

A company has a collection period of 36 days and factors all receivables immediately at a discount of 2.6 percent. What is the effective annual cost of borrowing? Assume 365 days per year.

Over a 25-year period an asset had an arithmetic return of 13.1 percent and a geometric return of 12.6 percent. Using Blume’s formula, what is your best estimate of the future annual returns over the next 10 years?