Assignment from nickkynickky
2.Wycliff Contractors, Inc., has the following monthly purchasing schedule and ending accounts payable:
- Calculate the days payables outstanding for March, April, May, and June using quarterly purchases to calculate the average daily purchases.
- The following table shows the amount of payables remaining in successive months for purchases made during the January through June period of operations. Convert the table to a balance fraction matrix.
Accounts Payable Balances
4.Sears is evaluating the choice between paper check disbursement and ACH disbursement. Sears would incur up-front investment costs of $40,000. Based on a perpetuity of 1,000 payments per month, per-payment savings if 40 cents, annual cost of capital is assumed to be 5%.
a.What is the NPV of the decision to convert to ACH?
b.What is the minimum number of payments per month in order to justify the cost to convert to ACH disbursing?
5.ACD, Inc., a computer parts company, presently pays its largest supplier by check and is trying to determine whether to switch to electronic payment. Its present credit period is 45 days. Its opportunity cost for funds is 8% annually. The disbursement float on its checks averages 4 days. It estimates the variable costs per check to be $8.35. Its average payment to the supplier is $20,000. Using ACH debits initiated by its supplier would result in per-payment charges of $3 and clearance float of 1 day. Its supplier has generally agreed to pay any switchover costs necessary to make ACD “financial EDI-ready”. The credit period for electronic payments would be 48 days. Should ACD switch to electronic payments?