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10. What is the economic order quantity for the following inventory policy: A firm sells 32,000 bags of premium sugar per year. The cost per

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10. What is the economic order quantity for the following inventory policy: A firm sells 32,000 bags of premium sugar per year. The cost per order is P200 and the firm experiences a carrying cost of P0.80 per bag. a. 2,000 bags C. 8,000 bags b. 4,000 bags d. 16,000 bags 11. For Raw Material L12, a company maintains a safety stock of 5,000 pounds. Its average inventory (taking into account the safety stock) is 12,000 pounds. What is the apparent order quantity? a. 18,000 lbs. C. 14,000 lbs. b. 6,000 lbs. d. 24,000 lbs 12. The cost of giving up a cash discount under the terms of sale 1/10 net 60 (assume a 360-day year) is a. 7.2 percent C. 14.7 percent b. 6.1 percent d. 12.2 percent 13. The cost of giving up a cash discount under the terms of sale 5/20 net 120 (assume a 360-day year) is a. 15 percent C. 15.8 percent b. 18.9 percent d. 20 percent 14. A bank lends a firm $500,000 for one year at 8 percent and requires compensating balances of 10 percent of the face value of the loan. The effective annual interest rate associated with this loan is a. 8.9 percent c. 7.2 percent b. 8 percent d. 7.0 percent 15. A firm arranges a discount loan at a 12 percent interest rate, and borrows $100,000 for one year. The stated interest rate is and the effective interest rate is a. 12.00%; 12.00% b. 13.64%; 12.00% C. 12.00%; 13.64% d. 12.00%; 10.71% 16. A firm issued $2 million worth of commercial paper that has a 90-day maturity and sells for $1,900,000. The annual interest rate on the issue of commercial paper is a. 5 percent c. 17 percent b. 10 percent d. 21 percent

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