Jimmy & Timmys Corp (JTC) have annual credit sales of $255,000. Their credit terms are 2/18, net 30.

1If 50% of their customers take the discount and pay on day 18 and 50% pay on day 30, what is their investment in Accounts Receivable? (Assume a 360-day year.)

2If a new and aggressive competitor enters their market area, what is likely to happen to the figure you calculated in #5, all else the same? Will it be larger? Smaller? Not change? Be sure to fullybut conciselystate your reasoning.

3Assume that, in response to rising interest rates, JTCs main customers tighten credit terms. (Put another way, JTCs customers will now require earlier payment from their customers.) All else the same, what effect will this likely have on JTCs investment in Accounts Receivable? Please be sure to fully explain your reasoning in a concise fashion.