Q1:

qua System Inc. expects to have $26,475,000 in credit sales during the coming year. Currently all checks are sent to the home office. A proposed lockbox system can eliminate 2 days of float, releasing funds which, when invested, will earn 7.44 percent per year. What annual savings can Aqua System expect if the system is implemented? Use a 365-day year.

Q2:

Book Depot Inc. sells on terms of 3/10, net 85. What is the implicit cost of trade credit under these terms? Use a 365-day year.

Q3:

Pets Store Inc. sells on terms of 3/10, net 70. What is the effective annual cost of trade credit under these terms? Use a 365-day year.

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