#11

10. Talmud Book Company borrows $24,900 for 60 days at 12 percent interest. What is the dollar cost of the loan? Dollar cost Amount Interest y Days loan is of loan borrowed rate outstanding Days in the year (360) 11. McGriff Dog Food Company normally takes 27 days to pay for average daily credit purchases of S9,530. Its average daily sales are $10,680, and it collects accounts in 32 days. What is its net credit position? That is, compute its accounts receivable and accounts payable and subtract the latter from the former. a. Average daily credit sales Average collection period Accounts receivable Average daily credit purchases X Average payment period Accounts payable - b. If the firm extends its average payment period from 27 days to 37 days (and all else remains the same), what is the firm's new net credit position? Has it improved its cash flow? 12. Maxim Air Filters Inc. plans to borrow $300,000 for one year. Northeast National Bank will lend the money at 10 percent interest and requires a compen- sating balance of 20 percent. What is the effective rate of interest? 13. Digital Access Inc. needs $400,000 in funds for a project