Access over 20 million homework & study documents

Entreprise Finance

Content type
User Generated
Subject
Management
School
SUNY Empire State College
Type
Homework
Rating
Showing Page:
1/8
Surname1
Name
Course
Supervisor
Date
Chapter 7
Solution
a. Total annual cost =$50*12
=$600
b. Benefits
Savings =$590
Amount of interest earned =(3%/365*155)*2000
=$18.904

Sign up to view the full document!

lock_open Sign Up
Showing Page:
2/8
Surname2
Total benefits =$608.904
Total costs =$600
Net benefits =$8.90
c. In implementing the system, she could lose customers who have checks. However, since
the total benefits outweigh the total costs, she should implement it.
Solution
As per the data:
Credit sales = $400,000
Accounts receivable = $100,000
Computation:
Accounts receivable turnover:
Accounts receivable turnover = Credit sales / Accounts receivable
= $400,000 / $100,000
= 4
Average collection period:
Average collection period = 360 days / Accounts receivable turnover
= 365 days / 4 times
= 91.25 or 92 days
The terms 2/10, n/30 means that the credit period offered to the clients is 30 days. The collection
period is 92 days implying that the receivables management is underachieving and needs to
perform well in order to make the clients pay within time.

Sign up to view the full document!

lock_open Sign Up
Showing Page:
3/8

Sign up to view the full document!

lock_open Sign Up
End of Preview - Want to read all 8 pages?
Access Now
Unformatted Attachment Preview
Surname1 Name Course Supervisor Date Chapter 7 Solution a. Total annual cost =$50*12 =$600 b. Benefits Savings =$590 Amount of interest earned =(3%/365*155)*2000 =$18.904 Surname2 Total benefits =$608.904 Total costs =$600 Net benefits =$8.90 c. In implementing the system, she could lose customers who have checks. However, since the total benefits outweigh the total costs, she should implement it. Solution As per the data: • • Credit sales = $400,000 Accounts receivable = $100,000 Computation: Accounts receivable turnover: • Accounts receivable turnover = Credit sales / Accounts receivable = $400,000 / $100,000 =4 Average collection period: • Average collection period = 360 days / Accounts receivable turnover = 365 days / 4 times = 91.25 or 92 days The terms 2/10, n/30 means that the credit period offered to the clients is 30 days. The collection period is 92 days implying that the receivables management is underachieving and needs to perform well in order to make the clients pay within time. Surname3 Chapter 8 Solution Interest = principal * rate *time Time =Interest/(principal*rate) Interest =1350-1000 =350 Rate =9% 𝑇𝑖𝑚𝑒 = Time =3.89 years 350 1000 ∗ 9% Surname4 Solution a. Down payment = 20% *600000 =$120,000 Closing costs =$7000 Amounted needed =120000+7000 =$120,000 b. Amount of equity Amount apprised =300000 Mortgage = 100000 Amount of equity =300000-100000 =$200,000 c. Amount to borrow Amounted needed to put down =$127,000 Amo ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Anonymous
I was stuck on this subject and a friend recommended Studypool. I'm so glad I checked it out!

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Documents