Chapter 3: 5BP (page 249)
A pawnshop will lend \(2,500 for 45 days at a cost of \)35 interest. What is the effective rate of interest?
The effective interest rate is 11.2%.
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Thompson Wood Products has credit sales of \(2,160,000 and accounts receivable of \)288,000. Compute the value of the average collection period.
Why might a firm keep a safety stock? What effect is it likely to have on carrying cost of inventory?
If a firm uses a just-in-time inventory system, what effect is that likely to have on the number and location of suppliers?
Nowlin Pipe & Steel has projected sales of 72,000 pipes this year, an ordering cost of \(6 per order, and carrying costs of \)2.40 per pipe.
a. What is the economic ordering quantity?
Oral Roberts Dental Supplies has annual sales of \(5,200,000. Ninety percent are on credit. The firm has \)559,000 in accounts receivable. Compute the value of the average collection period.
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