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# 4 Corporate Finance/Accounting Questions (MBA Class)

I need some assistance. Answers are needed today. <br /><br /><br />Cash conversion cycle <br />Dennis Lasser has collected some information about a food wholesaler in order to estimate its cash conversion cycle. The accumulated information is given. What will Dennis find the cash conversion cycle to be? <br /><br />Inventory turnover = 10x <br />Inventory conversion period = 365/10 = 36.5 days <br />Receivables turnover = 20x <br />Receivables collection period = 365/20 = 18.25 days <br />Payables turnover = 25x <br />Payables deferral period = 365/25 = 14.6 days <br /><br />============= <br /><br />Cost of bank loan <br />A bank loan agreement calls for an interest rate equal to prime rate plus 1%. If prime rate averages 9% and non-interest-earning compensating balances equal to 10% of the loan must be maintained, what are the APR and the APY of the loan assuming annual payments? <br /><br />============= <br /><br />NPV of granting credit <br />A credit sale of \$15,000 has a 95% probability of being repaid in two months and a 5% probability of a complete default. If the investment in the sale is \$12,000 and the opportunity cost of funds is 15% per year, what is the NPV of granting credit? <br /><br />============= <br /><br />Economic order quantity <br />Knoxville Accountants LLP consumes 100,000 packets of plain copier paper annually. The usage is roughly constant throughout the year. The carrying cost of this inventory is \$2.00 per unit average inventory per year. The ordering and delivery cost is a fixed \$100 per order. <br /><br />What is the economic order quantity? <br />How many orders will be placed per year using the EOQ? <br />What is the average inventory level? <br />What is the total annual inventory cost?
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