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A. Hardrock Hardware PLC estimate a cash of $2500000 over the next five months. This amount is available to the firm in the form of

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A. Hardrock Hardware PLC estimate a cash of $2500000 over the next five months. This amount is available to the firm in the form of marketable securities. It can eam 10\% annual yield on its marketable securities. Conversion of marketable securities into cash entails a fixed cost of $750 per transaction. Determine: B. Wright Industries Limited traditionally follows a highly aggressive working capital policy with no long-term borrowings. Below are key details recently compiled: The firm is also proposing to offer a 4/10, net /30 discount policy to reduce accounts receivables. Wrights anticipates 30% of its customers will take advantage of the discount. As a result of this discount policy, the collection period will be reduced to 121 months. The company also provides the following data: Determine: i. the firm's working capital cycle, that is, cash conversion cycle. (4 marks) ii. whether the firm should offer the new discount policy to customers. (6 marks) A. Hardrock Hardware PLC estimate a cash of $2500000 over the next five months. This amount is available to the firm in the form of marketable securities. It can eam 10\% annual yield on its marketable securities. Conversion of marketable securities into cash entails a fixed cost of $750 per transaction. Determine: B. Wright Industries Limited traditionally follows a highly aggressive working capital policy with no long-term borrowings. Below are key details recently compiled: The firm is also proposing to offer a 4/10, net /30 discount policy to reduce accounts receivables. Wrights anticipates 30% of its customers will take advantage of the discount. As a result of this discount policy, the collection period will be reduced to 121 months. The company also provides the following data: Determine: i. the firm's working capital cycle, that is, cash conversion cycle. (4 marks) ii. whether the firm should offer the new discount policy to customers. (6 marks)

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