Fact Pattern: Henderson, Inc., has purchased a new fleet of trucks to deliver its merchandise. The trucks have a useful life of 8 years and cost a total of $500,000. Henderson expects its net increase in after-tax cash flow to be $150,000 in Year 1, $175,000 in Year 2, $125,000 in Year 3, and $100,000 in each of the remaining years.What is the payback reciprocal for Henderson’s fleet of trucks?

Henderson Office Supplies is considering a more liberal credit policy to increase sales, but it expects that 7 percent of the new accounts will be uncollectible. Collection costs are 6 percent of new sales, production costs are 73 percent of sales, and accounts receivable turnover is six times. Assume an increase in sales of $75,000. No other asset buildup will be required to service the new accounts. a. What is the level of investment in accounts receivable to support this sales expansion? Investment in accounts receivable           $  b. What would be Henderson’s incremental before‐tax return on investment? Return on incremental investment            % c. Should Henderson liberalize credit if a 35 percent before‐tax return is required (opportunity cost of capital)? multiple choice 1YesNo Assume Henderson also needs to increase its level of inventory to support new sales and that inventory turnover is two times on Cost of Goods Sold. d. What would be the total incremental investment in accounts receivable and inventory to support a $75,000 increase in sales? Total incremental investment           $  e. Given the income determined in part b and the investment determined in part d, should Henderson extend more liberal credit terms? multiple choice 2YesNo

You are considering purchasing a parlour that is currently generating $40,000 of after-tax cash flow.  On the basis of a review of other parlours in the region you have decided that you will like to earn an 13% rate of return on the proposed parlour purchase.  What is the firm's value if cash flows are expected to grow at an annual rate of 6% from now to infinity?Select one:a. $666,666.67b. $307,692.30c. $713,333.33d. $329,230.77

Beckett Company sold merchandise on account for $12,600, terms 2/10, n/30. Freight charges of $450 were prepaid by Beckett Company and added to the invoice. The customer returned $1,800 of merchandise before making the payment then paid the invoice within the discount period. What is the amount Beckett Company received?

On December 31, 20X0, Ace signs a lease to use a truck for four years. The truck has a current value of $58,600. Four annual payments of $10,000 are to be paid with the first made on December 31, 20X0. After that time, the truck (with an expected life of eight years) will be returned to the lessor.Ace has an incremental borrowing rate of 6 percent. The present value of a four-year annuity due of $10,000 at a 6 percent annual rate is $36,700.The lessor has an implicit annual interest rate of 8 percent built into the contract. Ace is aware of this implicit rate. The present value of a four-year annuity due of $10,000 at an 8 percent annual rate is $35,770.

On December 31, 20X0, Ace signs a lease to use a truck for four years. The truck has a current value of $58,600. Four annual payments of $10,000 are to be paid with the first made on December 31, 20X0. After that time, the truck (with an expected life of eight years) will be returned to the lessor.Ace has an incremental borrowing rate of 6 percent. The present value of a four-year annuity due of $10,000 at a 6 percent annual rate is $36,700.The lessor has an implicit annual interest rate of 8 percent built into the contract. Ace is aware of this implicit rate. The present value of a four-year annuity due of $10,000 at an 8 percent annual rate is $35,770.What liability should Ace report on its December 31, 20X0, balance sheet?