McGriff Dog Food Company normally takes 23 days to pay for average daily credit purchases of $9,350. Its average daily sales are $10,510, and it collects accounts in 27 days.

a.	What is its net credit position?

Net credit position

$

b-1.	If the firm extends its average payment period from 23 days to 35 days (and all else remains the same), what is the firm's new net credit position? (Negative amount should be indicated by a minus sign.)

Net credit position

$

b-2.

Has the firm improved its cash flow?

	Yes
	No

2)

City Farm Insurance has collection centers across the country to speed up collections. The company also makes its disbursements from remote disbursement centers so the firm's checks will take longer to clear the bank. Collection time has been reduced by two and one-half days and disbursement time increased by one and one-half days because of these policies. Excess funds are being invested in short-term instruments yielding 5 percent per annum.

a.	If City Farm has $4.30 million per day in collections and $3.50 million per day in disbursements, how many dollars has the cash management system freed up? (Enter your answer in dollars not in millions (e.g., $1,234,567).)

Freed-up funds

$

b.	How much can City Farm earn in dollars per year on short-term investments made possible by the freed-up cash? (Enter your answer in dollars not in millions (e.g., $1,234,567).)

Interest on freed-up cash

$

3)

A pawnshop will lend $4,250 for 45 days at a cost of $35 interest.

What is the effective rate of interest? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Effective rate of interest

%

4)

Maxim Air Filters Inc. plans to borrow $209,000 for one year. Northeast National Bank will lend the money at 15 percent interest and requires a compensating balance of 22 percent.

What is the effective rate of interest? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Effective rate of interest

%

5)

Talmud Book Company borrows $17,500 for 90 days at 11 percent interest.

What is the dollar cost of the loan? (Use a 360-day year. Do not round intermediate calculations and round your final answer to 2 decimal places.)

Cost of loan

$

6)

Knight Roundtable Co. has annual credit sales of $792,000 and an average collection period of 35 days in 2008.

What is the companys average accounts receivable balance? (Use a 360-day year.)

Average accounts receivable balance

$

7)

Sol Pine borrows $8,200 for one year at 11 percent interest.

What is the effective rate of interest if the loan is discounted? (Do not round intermediate calculations. Use a 360-day year. Input your answer as a percent rounded to 2 decimal places.)

Effective rate on a discounted loan

%

8)

Mervyns Fine Fashions has an average collection period of 35 days. The accounts receivable balance is $70,000.

What is the value of its annual credit sales? (Use a 360-day year.)

Annual credit sales

$