1)Using the following information on the NuVue and Top Vision companies to evaluate their reeivables policies. Both are manufacturers and sell on terms of 2/10 Net 30.

NuVue customers' receivables outstanding are $1,215,122 eligible for the discount and are excepted to take it and the remaining $520,766 is expected to be paid within the 30 days period. Top Vision has $815,867 eligible for discount, $ 451,331 to be paid by day 30, $260,383 up to 45 days outstanding, $173,589 due in 45 to 60 days and only $34,718 over 60 days.

a) What is the average collection period for each company?

b) Complete an aging schedule for each company?

2) The Tropeland Company has obtained the following information:

Annual Credit Sales = $30 million

Collection Period = 60 days

Terms: Net 30

Interest Rate = 12%

The company is considering offering terms of 4/10, net 30. It anticipates the 50 percent of its customers will take advantage of the discount. The collection period is expected to decrease by one month.

a) Should the new credit policy be adopted?

b) If DSI is 25 days what is the effect on PV of the decision?

c) If bad debt losses are 8% under the current policy but it expected to decrease to 5% overall what is the impact on the final decision? Provide detail of your analysis.

3) Major Elections sells 85,000 personal stereos each year at a price per unit of $55. All sales are on credit; the terms are 3/15, net 40. The discount is taken by 40 percent of customers.

a) What is the level of accounts receivable?

b) In reaction to a competitor, Major Electronics is considerable changing its credit terms to 5/15, net 40, to preserve its sales level. Describe qualitatively how this policy will affect the company's investment in accounts receivable?

c) If the company anticipates that 60 percent of customers will now take the discount what is the level of accounts receivable?

d) If the cost of goods sold equals 50 percent of sales, days sales in inventory are 45 days and the interest rate is 10% should they make the change in credit terms?

If you make assumptions they must be stated and clearly applied.