1(a)Samtana Company is in the retail business and is deciding if it should extend credit sales to its customers. The credit terms would be 1/15 net 60.If you were a customer of Samtana and purchased goods worth $200 would you pay early and take the discount or would you pay the full amount later.Assume that you can invest any money you have at an effective rate of 10%. Provide the necessary calculations and support your answer with an explanation.

(b) What are the positives and negatives of Samtana extending crediting to its customers.

(c)Explain to the mangers of Samtana the term optimal economic order quantity and how this information would help them in better managing their inventory levels.

2.Saminga Corp. has an inventory period of 50 days, a payables period of 20 days and a receivables period of 40 days.

(a)What is its cash conversion cycle and its operating cycle. (2 marks)

(b) Would Saminga want to increase or decrease its cash conversion cycle and its operating cycle? Explain why? (2 marks)

(c)What are the pros and cons for a company to have a positive balance in its float. (2 marks)

(d) Explain why a float surplus or deficit that is created by mail processing and clearing delays are not as relevant today as they would have been 50 years ago. (2 marks)