Need working, solutions with formulas in Excel file.

Answers:

16-9:

Nominal Cost = 14.90%

Effective Cost = 15.89%

16-11:

a) 60 days

b) $ 420,000

c) 7.3

(16-9) Grunewald Industries sells on terms of 2/10, net 40. Gross sales last year were $4,562,500 Cost of Trade Credit and accounts receivable averaged $437,500. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers? (Hint: Calculate daily sales based on a 365-day year, calculate the average receivables for discount customers, and then find the DSO for the nondiscount customers.) (16-11) Cash Conversion Negus Enterprises has an inventory conversion period of 50 days, an average collection Cycle period of 35 days, and a payables deferral period of 25 days. Assume that cost of goods sold is 80% of sales. a. What is the length of the firm's cash conversion cycle? b. If annual sales are $4,380,000 and all sales are on credit, what is the firm's investment in accounts receivable? c. How many times per year does Negus Enterprises turn over its inventory