WorkingCapitalManagement文件材料.ppt

Effective Cost of Trade Credit Periodic rate = 0.01/0.99 = 1.01% Periods/year = 365/(40 – 10) = 12.1667 Effective cost of trade credit 16-* Bank Loans The firm can borrow $100,000 for 1 year at an 8% nominal rate. Interest may be set under one of the following scenarios: Simple annual interest Installment loan, add-on, 12 months 16-* Simple Annual Interest Simple interest means no discount or add-on. Interest = 0.08($100,000) = $8,000 rNOM = EAR = $8,000/$100,000 = 8.0% For a 1-year simple interest loan, rNOM = EAR. 16-* Add-on Interest Interest = 0.08($100,000) = $8,000 Face amount = $100,000 + $8,000 = $108,000 Monthly payment = $108,000/12 = $9,000 Avg. loan outstanding = $100,000/2 = $50,000 Approximate cost = $8,000/$50,000 = 16.0% To find the exact effective rate, recognize that the firm receives $100,000 and must make monthly payments of $9,000 (like an annuity). 16-* Add-on Interest From the calculator output below, we have: rNOM = 12 (0.012043) = 0.1445 = 14.45% EAR = (1.012043)12 – 1 = 15.45% 16-* INPUTS OUTPUT N I/YR PMT PV FV 12 1.2043 100 -9 0 * * * * * * * * * * * * * * * * * * * * * * * * ? 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part. ? 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part. ? 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part. Working Capital Management Alternative Working Capital Policies Cash Management Inventory and A/R Management Trade Credit Bank Loans Chapter 16 16-* Working Capital Terminology Working capital: current assets. Net working capital: current assets minus current liabilities. Net operating working capital: current assets minus (current liabilities less notes payable). Current assets investment policy: