Answer ALL questions. [30 MARKS] Read the following case study and answer the questions that follow: NORDIC LIMITED: WORKING CAPITAL AND CAPITAL BUDGETING Nordic Limited commenced operations on 01 January 2023. Its mission was to provide an innovative product whilst ensuring creative customer experiences. It's talented staff are guided by the values, social conscience and customer- centric mindset espoused by the board of directors. The company is committed to successful growth by delivering excellent service to its customers to whom it offers quality and value. Its success is also attributable to the successful management of its working capital. Although it has been in operation for a short period, it actively seeks opportunities for expansion. The following information was made available by Nordic Limited for 2023: It successfully negotiated credit terms of 4.5/10 net 60 days with its creditors whilst credit terms of 2/10 net 30 days were granted to debtors. The purchase cost of the product sold by Nordic Limited was R100 per unit. The cost of keeping each unit in inventory was 10% of the unit cost. The cost of placing an order for the product was R30. The selling price was R140 per unit and the sales for the year totalled 52 000 units, of which 90% was on credit. The company purchased 60 000 units of which 80% was on credit. It took approximately 10 days for the goods to be delivered to Nordic Limited each time an order was placed with the supplier. Nordic Limited was open for business for all the days in 2023 except for the weekends. On 31 December an amount of R600 000 was owed to suppliers for goods purchased on credit whilst an amount of R500 000 was owed by customers for credit sales. The company had an inventory turnover of 18.25 times. Nordic Limited assumes a 365-day year in its calculations. In keeping with the company's growth initiatives, the directors have identified two possible investment opportunities for 2025 viz. Project A and Project B. An investment of R4 000 000 is required for each project and a scrap value of R400 000 (not included in the figures below) is anticipated for Project A only. The useful life of each project is estimated to be five years. Project A is expected to generate net cash flows of R1 420 000 (Year 1), R1 370 000 (Year 2). R1 380 000 (Year 3), R1 170 000 (Year 4) and R1 120 000 (Year 5). Project B is expected to generate net cash flows of R1 320 000 per year and net profits of R520 000 per year over its useful life. The company's cost of capital is predicted to be 15%. REQUIRED Answer the following questions related to 2023: 1. Calculate the cost (as a percentage, expressed to two decimal places) to Nordic Limited of not accepting the settlement discount offered by the suppliers. (4 marks) 2. Calculate the economic order quantity. (3 marks) 3. Determine the level of inventory at which an order should be placed for the replacement of inventory. (3 marks) 4. Calculate the cash conversion cycle (expressed to two decimal places). (5 marks) Calculate the following related to the two possible investment opportunities for 2025. Ignore taxes. Where applicable use the discount factors from the four decimals present value tables. 5. Payback Period of both Projects (expressed in years, months and days). (6 marks) 6. Accounting Rate of Return on average investment of Project B (expressed to two decimal places). (3 marks) 7. Profitability Index of both projects (expressed to two decimal places). (6 marks)