INSTRUCTIONS: Answer ALL the following questions. 1. Consider the following financial Information for Payne Ltd for the year ending December 31. 2021 is as follows. Items I December 31 January Inventory Accounts $6 200 $6 620 11 836 13 200 receivable Accounts payable 9 200 10 200 Other information Net Sales $90 000 Cost of goods sold 55 400 Net Purchases 56 000 Table 1. The firm has a current annual outlay of $4,200,000 on operating cycle investments. The company currently pays 10 percent for its negotiated financing. (Assume a 360-day operating year.) Required: I. Calculate the operating and cash conversion cycle for the company (10 marks) II. Calculate the daily expenditure and the firm's annual savings if the operating cycle is reduced by 15 days (5 marks) 2. Harbour view Hardware provides the following data: Current annual credit sales = Collection period 12 000 000 2 months Terms Required rate of return net/30 15% The firm proposes to offer a 3/10, net /30. The firm anticipates 25% of its customers will take advantage of the discount. As a result of the discount policy, the collection period will be reduced to 1 1/2 months. Required: Should the firm offer the new discount policy to its customers? (5 marks) (Total 20 marks)