1. ABC Company has an average collection period of 38 days and factors all of its receivables immediately at a 2.5 percent discount. Assume all accounts are collected in full. What is the firm's effective cost of borrowing?

2. Month Sales $ Month Sales $

Jan 31,703 July 44,071

Feb 42,936 Aug 24,706

Mar 24,706 Sep 31,703

Apr 44,071 Oct 24,706

May 31,703 Nov 42,936

June 42,936 Dec 44,071

Sales are collected as follows:

In the month of Sales: 20%

In the next month: 23%

After 2 months: 9%

After 3 months: remainder is collected

Calculate the cash collection for November.

3. Month Sales $ Month Sales $

Jan 19,997 July 43,459

Feb 43,192 Aug 44,978

Mar 44,978 Sep 19,997

Apr 43,459 Oct 44,978

May 19,997 Nov 43,192

June 43,192 Dec 43,459

Sales are collected as follows:

In the month of Sales: 43%

In the next month: 34%

After 2 months: 7%

Remainder is considered as bad debt and is not collected.

Calculate the cash collection for June.

4.The terms of the sale were 1/12, net 34. What is the effective annual rate of interest?

5. Month Sales $ Month Sales $

Jan 34,030 July 10,539

Feb 23,546 Aug 49,629

Mar 49,629 Sep 34,030

Apr 10,539 Oct 49,629

May 34,030 Nov 23,546

June 23,546 Dec 10,539

The company has estimated expenses as follows:

General and administrative expenses: $3,299

Material purchases are 41 percent of sales. Material purchases are paid in the month following the purchase.

Interest payment per month: $4,126

Rent expenses per quarter starting March: $4,989

Calculate the cash outflows for June.

6. Month Sales $ Month Sales $

Jan 19,215 July 33,620

Feb 11,663 Aug 45,138

Mar 45,138 Sep 19,215

Apr 33,620 Oct 45,138

May19,215 Nov 11,663

June 11,663 Dec 33,620

Sales are collected as follows:

In the month of Sales: 44%

In the next month: 34%

After 2 months: 8%

After 3 months: remainder is collected

Calculate the cash collection for December.