1. A COMPANY CONSIDERING CHANGING FROM PAYMENT BY CHECK, WITH A VALUE DATE OF 60 DAYS (I.E. TOTAL CREDIT PERIOD AND DISBURSEMENT FLOAT = 60 DAYS), TO PAYMENT BY ACH WITH A VALUE DATE OF 5 DAYS. IF THE RELEVANT COST OF CAPITAL IS 12%, WHAT DISCOUNT MUST THIS COMPANY RECEIVE IN ORDER MAKE THIS ARRANGEMENT WORTHWHILE?

2. A COMPANY WANTS TO OFFER A DISCOUNT TO THEIR CUSTOMERS FOR EARLY PAYMENT. THE CURRENT TERMS OF SALE ARE NET 60 AND THEY WANT TO FIGURE OUT A DISCOUNT RATE FOR PAYMENT ON DAY 10 AT WHICH THEY WILL BE INDIFFERENT BETWEEN THE TWO PAYMENT DATES. IF THE COMPANYS COST OF CAPITAL IS 10%, WHAT IS THE PROPER DISCOUNT RATE TO OFFER?

3. A SELLER IS CURRENTLY OFFERING TERMS OF 1.5/10 NET 60. WHAT IS THE EFFECTIVE INTEREST RATE TO THE BUYER FOR NOT TAKING THE DISCOUNT?

4. A BUYER IS OFFERED TERMS OF 2/10 NET 45, BUT THE SELLER TYPICALLY ALLOWS PAYMENT AS LATE AS DAY 55 WITH NO PENALTY. GIVEN THIS INFORMATION, WHAT IS THE EFFECTIVE COST TO THIS BUYER OF NOT TAKING THE DISCOUNT?

5. A COMPANY IS CURRENTLY OFFERING TERMS OF 1/10 NET 45 TO ITS CUSTOMERS. IF THE AVERAGE INVOICE IS $200,000, AND THE COMPANYS COST OF CAPITAL IS 8%, WOULD THE COMPANY BETTER OFF IF THEIR CUSTOMERS TAKE THE DISCOUNT OR NOT?

6. A COMPANY CURRENTLY HAS DAYS INVENTORY OF 45 DAYS, DAYS RECEIVABLES OF 35 DAYS AND DAYS PAYABLES OF 31 DAYS. WHAT IS THE CASH CONVERSION CYCLE FOR THIS COMPANY?

7. IF A COMPANY HAS DAYS RECEIVABLES OF 60 DAYS AND DAYS PAYABLES OF 40 DAYS, HOW MANY DAYS OF INVENTORY CAN THEY CARRY AND STILL KEEP THEIR CASH CONVERSION CYCLE UNDER 30 DAYS?

8. A COMPANY HAS A CASH TURNOVER OF 8.11, DAYS INVENTORY OF 60 DAYS AND DAYS PAYABLES OF 55 DAYS. WHAT ARE THE DAYS RECEIVABLES FOR THIS COMPANY?