7-5 Megahurtz International Car Rentals has rent-a-car outlets throughout the world. It also keeps funds for transactions purposes in many foreign countries Assume in 2003. it held 10.000 reals in Brazil worth 35.000 dollars. It drew 12 percent interest, but the Brazilian real declined 20 percent against the dollar. a. What is the value of its holdings, based on U.S. dollars, at year-end? (Hint multiply $35,000 times 1 12 and then multiply the resulting value by 80 drew 9 percent interest and the real went up by 10 percent agan the pi b. What is the value of its holdings, based on U.S. dollars, at year-end if it dollar? Solution Megahurtz international car rental a.$35,000x1.12=$39,200 S39.200 x 80%=$.360 dollar value of real holdings b.$35,000x109=$38,150 S38.150x 110%=$41.965 dollar value of real holdings 7-6 Thompson Wood Products has cred it sales of $2, 160,000 and accounts receivable of $288,000. Compute the value of the average collection period Solution: Thompson wood Products Accounts receivable Average collection period average daily credit sales $288.00 $2160,000/360 $288,000 $6.000 CopyrightC 2005 by The McGray-Hill Companies, Inc.Copyright © 2005 by The McGraw-Hill Companies, Inc. S-248 7-5. Megahurtz International Car Rentals has rent-a-car outlets throughout the world. It also keeps funds for transactions purposes in many foreign countries. Assume in 2003, it held 10,000 reals in Brazil worth 35,000 dollars. It drew 12 percent interest, but the Brazilian real declined 20 percent against the dollar. a. What is the value of its holdings, based on U.S. dollars, at year-end? (Hint: multiply $35,000 times 1.12 and then multiply the resulting value by 80 percent or 1 – .20). b. What is the value of its holdings, based on U.S. dollars, at year-end if it drew 9 percent interest and the real went up by 10 percent against the dollar? Solution: Megahurtz International Car Rental a. $35,000 x 1.12 = $39,200 $39,200 x 80% = $31,360 dollar value of real holdings b. $35,000 x 1.09 = $38,150 $38,150 x 110%= $41,965 dollar value of real holdings 7-6. Thompson Wood Products has credit sales of $2,160,000 and accounts receivable of $288,000. Compute the value of the average collection period. Solution: Thompson Wood Products 48 days $6,000 $288,000 $2,160,000/ 360 $288,000 Average daily credit sales Accounts Receivable Average collection period = = = =