(Topic 5) Which of the following ways of financing accounts receivable requires a company to relinquish control of the type of customer to which it sells?

The correct answer is A. $1,500,000. ABC Company is considering investing in new production technology. ABC has projected that the investment would add $5,000,000 in additional operating profit and that the resulting balance sheet would show $7,000,000 in long-term debt and $11,000,000 in total equity. ABC has a…

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Question

(Topic 5)

Which of the following ways of financing accounts receivable requires a company to relinquish control of the type of customer to which it sells?

Options

A$1,500,000
B$2,200,000
C$3,300,000
D$3,500,000

How the community answered

(40 responses)

A
78% (31)
B
3% (1)
C
5% (2)
D
15% (6)

Explanation

ABC Company is considering investing in new production technology. ABC has projected that the investment would add $5,000,000 in additional operating profit and that the resulting balance sheet would show $7,000,000 in long-term debt and $11,000,000 in total equity. ABC has a 34% tax rate and a 10% WACC. Which of the following is the investment's EVA?

Topics

#accounts receivable financing#factoring#credit control#working capital

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