Microbiotics currently sells all of its frozen dinners cash on delivery but believes it can increase sales by offering supermarkets 1 month of free credit. The price per carton is $100, and the cost per carton is $65. The unit sales will increase from 1,050 cartons to 1,110 per month if credit is granted. Assume all customers pay their bills and take full advantage of any credit period offered.
a.	If the interest rate is 1% per month, what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
	Change in total monthly profit $
b.	If the interest rate is 1.5% per month, what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
	Change in total monthly profit $

2.

Company X sells on a 1/15, net 90, basis. Customer Y buys goods with an invoice of $6,000.
c.	What is the effective annual rate of interest if Y pays on the due date rather than day 15? (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
	Effective annual rate

3.

Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 750 payments a day will be made to lock boxes with an average payment size of $2,000. The banks charge for operating the lock boxes is $.50 a check. The interest rate is .013% per day.
b.	What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
	Minimum reduction in time	days

4.

A firm sells its $1,110,000 receivables to a factor for $1,076,700. The average collection period is 1 month. What is the effective annual rate on this arrangement? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Effective annual rate	%