Provide detailed step by step solution explaining in words on how you get to the answers. The answer
Provide detailed step by step solution explaining in words on how you get to the answers. The answers are provided to you and highlighted, however you have to explain step by step on how you get to the answers:
7.1. Blake Company has 3400 hourly workers. They work 40 hours a week, at the rate of $7.00 an hour, and they are paid every Friday. The company has decided to pay them twice a month. The cost of printing and processing each check is $1.25. The cost of capital to the company is 14%. Find the present value of the annual savings created by this decision. Find the value added to the company by this procedure.
$178,272, $1.452 million
7.2. James Corporation has the following terms with its suppliers: 2/10, net 60. It normally takes the discount and pays within ten days. However, due to cash shortage, it intends to delay the payment. Find the cost of this short-term financing for James.
7.3. Chatterton Company has obtained a $75,000 short-term loan from the bank with the understanding that Chatterton will repay the loan in two equal monthly installments of $38,250 each. The first installment is due after 30 days, and the second after 60 days. Find the cost of this loan for Chatterton.
7.4. (A) De la Mare Company has $140,000 in accounts receivable that will be collected within 75 days. Since de la Mare needs cash immediately, it has decided to factor them and has received $130,000. Find the cost of this loan for de la Mare.
(B) Donne Factoring Company, who took the receivables, actually was able to collect only $135,000 after 90 days. Find the rate of return on this investment for Donne.