1/ Tobin Supplies Company expects sales next year to be $460,000. Inventory and accounts receivable will increase $95,000 to accommodate this sales level. The company has a steady profit margin of 15 percent with a 30 percent dividend payout

How much external financing will Tobin Supplies Company have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing.

External funds needed

$

2/ Boatler Used Cadillac Co. requires $860,000 in financing over the next two years. The firm can borrow the funds for two years at 7 percent interest per year. Mr. Boatler decides to do forecasting and predicts that if he utilizes short-term financing instead, he will pay 5.25 percent interest in the first year and 9.55 percent interest in the second year. Assume interest is paid in full at the end of each year.

Determine the total two-year interest cost under each plan.

	Interest Cost
Long-term fixed-rate	$
Short-term variable-rate	$

3/ Thompson Wood Products has credit sales of $1,908,000 and accounts receivable of $254,400. Compute the value of the average collection period. (Use a 360-day year.)

Average collection period

days