1. Assume that Jayne Plums first initiative to offer a 10 percent discount was implemented, and the companys average collection period dropped to 32 days. If net sales per day remained the same, as Jayne expects, what would be the new accounts receivable balance? How much cash was freed up by the reduction in accounts receivable? What is the new accounts payable balance if the money is used to pay off suppliers?

2. Assume that ABCO does obtain an 8 percent loan for one year in the amount you solved in question 1, and it reduces its accounts payable balance accordingly. Now the company is taking 2 percent discounts on all purchases and paying 8 percent a year on the loan balance.

Quizzes Announcements 4. Jayne's second initiative calls for ABCO to obtain a bank loan of a sufficient size to enable the company to take all suppliers' discounts. What is the minimum size of this loan? What should Jayne be considering based on current state of affairs? Grades People Office 365 (Hint: To take all suppliers' discounts, the average payment period must be 10 days, and net purchases will be purchases - (Purchases from Figure 1 x .02)). Assume that all this happens and solve the following formula for the new accounts payable balance, using: Accounts payable = Average payment period x Purchase per day**Based on net purchases/360. Now compare the accounts payable you just solved with the new accounts payable balance you found in question 3. The difference is the size of the loan that is required. 5. Assume that ABCO does obtain an 8 percent loan for one year in the amount you solved in question 4, and it reduces its accounts payable balance accordingly. Now the company is taking 2 percent discounts on all purchases and paying 8 percent a year on the loan balance. Quizzes Announcements 4. Jayne's second initiative calls for ABCO to obtain a bank loan of a sufficient size to enable the company to take all suppliers' discounts. What is the minimum size of this loan? What should Jayne be considering based on current state of affairs? Grades People Office 365 (Hint: To take all suppliers' discounts, the average payment period must be 10 days, and net purchases will be purchases - (Purchases from Figure 1 x .02)). Assume that all this happens and solve the following formula for the new accounts payable balance, using: Accounts payable = Average payment period x Purchase per day**Based on net purchases/360. Now compare the accounts payable you just solved with the new accounts payable balance you found in question 3. The difference is the size of the loan that is required. 5. Assume that ABCO does obtain an 8 percent loan for one year in the amount you solved in question 4, and it reduces its accounts payable balance accordingly. Now the company is taking 2 percent discounts on all purchases and paying 8 percent a year on the loan balance