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Please Check Attached Files for Questions on Finance, Due Date is Sunday 24th. i would like the answers to be on a word file

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Name: Please double check your work - answers are either correct or incorrect. Also, show ALL work in order to receive credit! All count the same, 10 Points each (a-d and 1-6) CHAPTER 7 Northern Falls Distributing Company (NFDC) of Maine sells fans and heaters to retail outlets throughout the Northeast. Barney Jones, the president of the company, is thinking about changing the firm's credit policy to attract more customers. You are the CFO and you are very concerned - Barney's not good with numbers! The present policy calls for a 1/10, net 30 cash discount, and the new policy would call for a 3/10, net 30 cash discount. Currently, 30 percent of NFDC customers are taking the discount, and Barney says that this number would go up to 50 percent with the new discount policy. Barney also projects that net annual sales would increase from a level of $400,000 to $600,000 as a result of the change in the cash discount policy. The increased sales would certainly affect the inventory level. The average inventory carried by NFDC is based on a determination of EOQ (EOQ/2). Barney projects that sales of fans and heaters increase from 15,000 to 22,500 units. The ordering cost for each order is $200 and the carrying cost per unit is $1.50 (these values will not change with the discount). Each unit in inventory has an average cost of $12 (again, this will not change with the discount). a. Compute the accounts receivable balance before the change in the cash discount policy. Use the net sales (total sales minus cash discounts) to determine the average daily sales. b. Compute the accounts receivable balance after the change in the cash discount policy. Use the net sales (total sales minus cash discounts) to determine the average daily sales. c. Determine EOQ before the change in the cash discount policy, and its resulting inventory cost. d. Determine EOQ after the change in the cash discount policy, and its resulting inventory cost. e. What is your analysis of Barney's proposed change? 7-1 1. Cash discount decision CHAPTER 8 Alpine Clothiers can borrow from its bank at 11 percent to take a cash discount. The terms of the cash discount are 2/15, net 60. Should the company borrow the funds? 2. Effective rate of interest Your bank will lend you $2,000 for 45 days at a cost of $25 interest. What is your effective rate of interest? 3. Effective rate on discounted loan Joe is going to borrow $3,000 for one year at 8 percent interest. What is the effective rate of interest if the loan is discounted? 7-2 4. Prime vs. LIBOR James is going to borrow $5,000 to help write a book. The loan is for one year and the money can either be borrowed at the prime rate or the LIBOR rate. Assume the prime rate is 6 percent and LIBOR 1.5 percent less. Also assume there will be a $40 transaction fee with LIBOR (this amount must be added to the interest cost with LIBOR). Which loan has the lower effective interest cost? 5. Dollar cost of a loan Western Boots Company borrows $16,000 for 30 days at 9 percent interest. What is the dollar cost of the loan? 6. Compensating balances American Gladiators Corp. plans to borrow $200,000 for one year. Northern National Bank will lend the money at 10 percent interest and require a compensating balance of 20 percent. What is the effective rate of interest? 7-3 Time Value of Money (Chapter 9) NAME: 1. How much would you have in savings if you kept $300 on deposit (in the bank) for 4 years at 4%, compounded semiannually? 2. What is the present value of a withdrawal of $500 at the end of each year for 10 years with an interest rate of 12%? 3. How much money would you need to set aside at 20 to have retirement funds of $250,000 at age 60, assuming an interest rate of 5%? 4. You make annual deposits of $800 in an account earning 12%. How much will this account be worth if you retire in 20 years? 5. How much would you have in savings if you kept $2000 on deposit for 2 years at 8% percent, compounded semiannually? 6. If you deposit $2,000 in a certificate of deposit at 5%, how much will it be worth in five years? 7. How much would you have in savings if you kept $1000 on deposit for 4 years at 16%, compounded quarterly? 8. You make annual deposits of $375 in an account earning 12%. How much will this account be worth if you retire in 25 years? 9. How much money would you need to set aside at 20 to have retirement funds of $100,000 at age 60, assuming an interest rate of 7%? 10. How much would you have to deposit now to be able to withdraw $800 at the end of each year for 10 years from an account that earns 12%? 11. You want a really nice new car and decide to buy today. You sit down with the salesperson to fill out the paperwork. What will your annual payment be for a $30,000, 4 year loan at 3%? 12. You want to borrow $50,000 to buy a new home and you want to pay it back quickly. What will your monthly payment on that loan be if the interest rate is 9% and you finance for 4 years