1. (Effective annual rate) Compute the cost of the following trade credit terms using the compounding formula, or effective annual rate. Note: assume a 30 day month and 360 day year. A 4/10, net 60 B 2/15, net 45 C 2/15, net 60 D 3/10, net 30 A When payment is made on the net due date, the APR of the credit terms of 4/10, net 60 is %, (round to two decimal places). The EAR of the credit terms of 4/10, net 60 is %, (round to two decimal places). B When payment is made on the net due date, the APR of the credit terms of 2/15, net 45is %, (round to two decimal places). The EAR of the credit terms of 2/15, net 45 is %, (round to two decimal places). C When payment is made on the net due date, the APR of the credit terms of 2/15, net 60 is %, (round to two decimal places) The EAR of credit terms of 2/15, net 60 is %, (round to two decimal places) D When payment is made on the net due date, the APR of the credit terms of 3/10, net 30 is %, (round to two decimal places) The EAR of the credit terms of 3/10, net 30 is %, (round to two decimal places) 2. Nike Corp, buys on 3/10, net 30 days. What is the nominal cost of interest if Nike does not advantage of the trade discount offered? Assume a 360 day year. 66.3%, 12.0%, 22.3%, 55.7% 3. (Pro forma accounts receivable balance calculation) on March 31, Mikes bike shop had outstanding accounts receivable of $18,500. Mikes sales are roughly evenly split between credit and cash sales, with the credit sales collected half in the month after the sale and the remainder 2 months after the sale. Historical and projected sales for the bike shop are given here: MONTH SALES MONTH SALES January $18,000 March $26,000 February $22,000 April (projected) $30,000 a. Under these circumstances, what should the balance in accounts receivable be at the end of April? b. How much cash did Mikes realize during April from sales and collections? a. $ , round to the nearest dollar. b. $ , round to the nearest dollar. 4. MDX Sales Corp. is expecting a 10% increase in sales next year. MDX has an inventory balance of $1,000,000 and uses the percent of sales forecasting method. Which of the following could explain why the inventory forecast of $1,000,000 might be too high? C. The growth in sales could be as high as 15%. B. A fixed amount of inventory is required to do business, so inventory doesnt increase proportionally with sales. D. The company is going to change its depreciation method in the coming year. A. The current inventory balance of $1,000,000 is lower than usual because of a one-time end of year fire sale