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Q17-8. Briefly describe each of the following disbursement products/methods:

Zero-balance accounts (ZBAs)
Controlled disbursement
Positive pay

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Casey Durgan
Casey DurganLv2
29 Sep 2019

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Please consider the following information for the next 4 questions (Q17 - Q20). TAMU Inc. is for sale and there is a price tag of $225,000. Your company, ABC, who is considering the purchase, has a beta of 1.5, the market is expected to have a 20% return and the risk-free rate is 5%. The forecasted free cash flows for the next 4 years for TAMU are 7000 (FCF1), 22000(FCF2), 0(FCF3), and 50000 (FCF4). The company is expected to grow at 4% indefinitely after that. Your company has a debt/equity ratio of 2/3 and the applicable tax rate is 35%. ABC's cost of debt (before taxes) is 8%. What is the cost of equity for ABC company? (Points : 5) 35%
30%
27.5%
22.5%

Question 18. 18. Continuing with the information from Q17, what is ABC's WACC? (Points : 5)
18.58%
19.70%
21.41%
15.88%


Question 19. 19. Continuing with the information from Q17, what is the terminal value for TAMUC Inc. after the 4th year (TV4)? (Points : 5)
342,935.53
254,769.21
269,106.57
356,652.95


Question 20. 20. Continuing with the information from Q17, what is the NPV of purchasing TAMU Inc.? (Points : 5)
positive 2,220.43
negative 2,220.43
positive 178,490.54

1.The management of current assets and current liabilities in the short run can lead to several challenges for the financial manager. What are some of the more common challenges or problems encountered by the firm in this regard, and what are the possible solutions? Explain your answers.

2. Solve the following problem. Norma’s Cat Food of Shell Knob ships cat food throughout the country. Norma has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by two and one-half days. Furthermore, the cash management department of her bank has indicated to her that she can defer her payments on her accounts by one-half day without affecting suppliers. The bank has a remote disbursement center in Iowa.

If the company has $5 million per day in collections and $3 million per day in disbursements, how many dollars will the cash management system free up? Justify your answers.

If the company can earn 8 percent per annum on freed-up funds, how much will the income be? Justify your answers.

If the annual cost of the new system is $800,000, should it be implemented? Explain why or why not.

Identify and briefly describe each of the following types of bonds.

a. agency bonds

b. municipal bonds

c. zero-coupon bonds

d. junk bonds

e. foreign bonds

f. collateralized mortgage obligations (CMOs)

What type of investor do you think would be most attracted to each??

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