Receivables Investment

Medwig Corporation has a DSO of 25 days. The company averages $6,500 in sales each day (all customers take credit). What is the company's average accounts receivable? Assume a 365-day year. Round answer to the nearest dollar.\

Cost of Trade Credit

A large retailer obtains merchandise under the credit terms of 2/15, net 40, but routinely takes 55 days to pay its bills. (Because the retailer is an important customer, suppliers allow the firm to stretch its credit terms.) What is the retailer's effective cost of trade credit? Assume a 365-day year. Do not round intermediate calculations. Round answer to two decimal places.

Interest Rate Parity

The nominal yield on 6-month T-bills is 8%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 4%. In the spot exchange market, 1 yen equals $0.01. If interest rate parity holds, what is the 6-month forward exchange rate? Do not round intermediate calculations. Round answer to five decimal places.

Purchasing Power Parity

A computer costs $660 in the United States. The same model costs 760 in France. If purchasing power parity holds, what is the spot exchange rate between the euro and the dollar? Do not round intermediate calculations. Round answer to two decimal places.