1. The Sand Surfer Corporation has annual sales of $61 million. The average collection period is 33 days. What is the average investment in accounts receivable as shown on the balance sheet? Assume 365 days per year. (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to nearest whole dollar amount.)

Average investment

$

2. The Arizona Bay Corporation sells on credit terms of net 30. Its accounts are, on average, 6 days past due. Annual credit sales are $8.8 million.

What is the companys balance sheet amount in accounts receivable? (Use 365 days a year. Enter your answer in dollars, not millions of dollars, i.e. 1,234,567. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)

Accounts receivable

$

3.

The Trektronics store begins each week with 220 phasers in stock. This stock is depleted each week and reordered. The carrying cost per phaser is $17 per year and the fixed order cost is $32.

What is the current total carrying cost?

Carrying costs

$

What is the current restocking cost?

Restocking costs

$

What is the economic order quantity? (Round your answer to 2 decimal places. (e.g., 32.16))

EOQ

$

How many orders per year will Tektronics place under the new policy? (Round your answer to 2 decimal places. (e.g., 32.16))

Orders per year

$

4.

The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.0 percent per period.

	Current Policy			New Policy
Price per unit	$	68		$	70
Cost per unit	$	36		$	36
Unit sales per month		2,900			?

What is the break-even quantity for the new credit policy? (Round your answer to 2 decimal places. (e.g., 32.16))

Break-even quantity

5.

Sache, Inc., expects to sell 1,540 of its designer suits every week. The store is open seven days a week and expects to sell the same number of suits every day. The company has an EOQ of 1,300 suits and a safety stock of 80 suits. Once an order is placed, it takes three days for Sache to get the suits in.

How many orders does the company place per year? (Round your answer to 2 decimal places. (e.g., 32.16))

Orders per year

6. Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 120 units have been made by customers requesting credit. The variable cost is $9,000 per unit, and the credit price is $11,000 each. Credit is extended for one period. The required return is 1.5 percent per period. If Solar Engines extends credit, it expects that 40 percent of the customers will be repeat customers and place the same order every period forever and the remaining customers will be one-time orders.

Calculate the NPV of the decision to grant credit. (Round your answer to 2 decimal places. (e.g., 32.16))

NPV

$

7.

Solar Engines manufactures solar engines for tractor-trailers. Given the fuel savings available, new orders for 185 units have been made by customers requesting credit. The variable cost is $11,600 per unit, and the credit price is $14,250 each. Credit is extended for one period. The required return is 1.9 percent per period and the probability of default is 15 percent. Assume the number of repeat customers is affected by the defaults. In other words, 30 percent of the customers who do not default are expected to be repeat customers.

Calculate the NPV of the decision to grant credit. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)

NPV

$