Q 1. Company X sells on a 1/20, net 90, basis. Company Y buys goods with an invoice of $2,500.

a.How much can company Y deduct from the bill if it pays on day 20?(Do not round intermediate calculations.)

b.How many extra days of credit can company Y receive if it passes up the cash discount?

c.What is the effective annual rate of interest if Y pays on the due date rather than day 20?(Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Q 2. 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 $70, and the cost per carton is $50. The unit sales will increase from 1,020 cartons to 1,080 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.)

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. Negative amount should be indicated by a minus sign.)

c.Assume the interest rate is 1.5% per month but the firm can offer the credit only as a special deal to new customers, while existing customers will continue to pay cash on delivery. What will be the change in the firm's total monthly profits on a present value basis under these conditions?(Do not round intermediate calculations. Round your answer to 2 decimal places.)