1.A firm is considering relaxing its credit standards which will result in annual sales increasing from $1.50 million to $2.11 million. Costs of goods sold represent 48 percent of sales and the average collection period is expected to increase from 40 to 53 days. If the firm requires a return of 13.3 percent, what the cost of investing in the extra accounts receivables from the planned relaxation of credit standards?

2.A firm is considering relaxing its credit standards which will result in annual sales increasing from $1.50 million to $1.77 million. As a result of the change in credit standards bad debt expense is expected to increase from 0.2% to 2%. What is the cost of marginal bad debts?

3.Fertfood has a current market value of $30 million and earns $2,700,000 annually, while Tools-4U has a market value of $5 million and annual earnings of $1 million per year. If the companies merge an additional cash flow of $58260 would result next year, which is expected to grow at 2.6% per annum. The merged firm's weighted average cost of capital will be 10.7 percent and will have 11 million shares. If Fertfood pays $5,500,000 in cash for Tools-4U, what would be the net present value of the merger