Chapter 20
Problems 1-20, Appendix 1-5
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
Chapter 20
Question 1
Input Area:
Output Area:
Unit price 140$
Chapter 20
Question 2
Input Area:
Output Area:
Receivable turnover 10.735
Annual sales 38,000,000$
Collection period 34
# days per year 365
Percentage taking discount 65%
Units sold per period 1,300
Sales price 1,750$
Periods per year 12
Chapter 20
Question 4
Input Area:
Output Area:
Chapter 20
Question 5
Input Area:
Output Area:
EAR (original terms) 20.13%
Chapter 20
Question 6
Input Area:
Output Area:
Collection period 33
Daily investment in receivables 42,300$
# days per year 365
Chapter 20
Question 7
Input Area:
Output Area:
Total credit sales 3,526,000$
Receivables turnover 16.591
If the firm increases the cash discount, then more
Units sold 8,200
Unit price 430$
Discount used % 60%
New terms 2% /10
New net 30
Chapter 20
Question 8
Input Area:
Output Area:
Chapter 20
Question 9
Input Area:
Output Area:
credit is first granted, then they will be a
good customer far into the future, and
the possible gains from the future
business outweigh the possible losses
from granting credit the first time.
Quantity ordered 8
Variable costs 1,900,000$
Credit price 2,015,000$
Uncollected orders 0.00500
Required return 1.8%
Chapter 20
Question 10
Input Area:
Unit sales per month 1,240 1,290
Output Area:
Cost of switching 919,050.00$
Perpetual benefit of switching 9,750.00$
The firm will have to bear the cost of sales for one
sales, which is why the initial cost is for one month.
Required return 0.95%
Price per unit 720$ 720$
Cost per unit 525$ 525$
Chapter 20
Question 11
Input Area:
Output:
The firm’s ordering policy is not optimal
The company should increase
the order size and decrease
Number of items used 2,500
Frequency of order 52
Carrying cost per unit 7.50$
Fixed order cost 1,300.00$
Chapter 20
Question 12
Input Area:
Output:
The firm’s ordering policy is not optimal
The company should decrease
the order size and increase
Number of items used 300
Frequency of order 52
Carrying cost per unit 38.00$
Fixed order cost 75.00$
Chapter 20
Question 13
Output Area:
Carrying costs = (Q/2)*CC