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2.1. Study the information provided below and answer the following question. INFORMATION DBV Inc. offers its customers 30 days credit but, at present, customers are
2.1. Study the information provided below and answer the following question. INFORMATION DBV Inc. offers its customers 30 days credit but, at present, customers are taking an average of 40 days credit. In order to speed up cash collection, the company is considering introducing a 1% discount for payment within 10 days. The company finances its working capital requirement using an overdraft at an annual cost of 9%. Required: Calculate the annual cost of offering the discount and evaluate whether or not the discount should be (4 marks) offered. 2.2.Use the information provided below to answer the following questions. INFORMATION During the financial year ended 31 December 2022, the total annual demand for cash at Edgemead Limited (Edgemead) amounted to R5 000000 and the fixed cost of converting marketable securities into cash and vice versa was R100 per order. Edgemead adhered to a policy of withdrawing exactly R1 000000 cash at a time and the interest rate on short-term marketable securities was 10% per annum. Required
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