1) Prolific Co. has an inventory period of 81 days, an accounts payable period of 41 days, and an accounts receivable turnover rate of 13. What is the length of the cash cycle? Assume 364 days in a year.

Select one:

a. 150 days

2) Puncak Rancak factors all of its receivables immediately at a discount rate of 1.5% The average collection period is 38 days and default is unlikely. What is the annual effective cost of borrowing? (Assume 365 days in a year)

Select one:

a. 9.75%

b. 15.62%

c. 8.75%

d. 16.40%

b. 71 days

c. 96 days

d. 68 days

3) In July, if a firm had a net cash inflow of RM2,000, and a beginning cash balance of RM5,000, but need an ending cash balance of RM30,000, then how much must the firm borrow that month?

Select one:

a. RM27,000

b. RM11,000

c. RM12,000

d. RM23,000

4) Karma Bhds terms of sale is 3/10 net 60. What is the effective annualized cost for customers that forgo the discount? (Assume 360 days in a year)

Select one:

a. 3.5%

b. 3.1%

c. 24.5%

d. 23.7%

5) You can make a one-time sale if you grant a new customer a month to pay. This customer wants to purchase an item with a sales price of RM500 and a variable cost of RM300. You estimate the customers probability of default at 30%. The monthly interest rate is 1%. Should you grant credit to this customer? Why or why not?

Select one:

a. No; because the NPV of the potential sale is -RM53.02

b. No; because the NPV of the potential sale is -RM63.05

c. Yes; because the NPV of the potential sale is RM33.05

d. Yes; because the NPV of the potential sale is RM46.53

6) On average, MB Motors has daily credit sales of RM42,000, an inventory period of 50 days, and a collection period of 25 days. What is the average accounts receivable balance?

Select one:

a. RM1,050,000

b. RM1,105,500

c. RM880,900

d. RM900,500