# emphasis on problem solving

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I will upload the quiz questions on the day of the quiz as it is timed. The quiz will consist of 5 problems and with emphasis on problem solving and decision making. The quiz will be timed for 3 hours and you should have a calculator available for the quiz. The quiz will take place on Monday at 9am EST and again you will have 3 hours to complete it. You will provide me with a detailed step by step answers as you will see in the sample questions that are uploaded.Document Preview:
6.1 Collection and NPV from the credit policy of 2/10, net 30 and 1% per month interest on all accounts after 30 days. OLD POLICY         Collection within 10 days 30 days 60 days 90 days Percentage 10% 30% 40% 20% Discount/interest -2% 0% 1% 1% Collection 10%*(1-2%) 30% 40%+(40%*1%) 20%+(20%*1%*2)   0.098 0.3 0.404 0.204 Discount Rate 12% pa     PV 0.098/(1+12%)^10/365 0.3/(1+12%)^30/365 .404/(1+12%)^60/365 .204/(1+12%)^90/365   0.0977 0.2972 0.3965 0.1984 NPV 0.0977+0.2972+0.3965+0.1984   0.9898       NEW POLICY         Collection within 10 days 30 days 60 days 90 days Percentage 10% 50% 30% 10% Discount/interest -2% 0% 1.50% 1.50% Collection 10%*(1-2%) 50% 30%+(30%*1.5%) 10%+(10%*1.5%*2)   0.098 0.5 0.3045 0.103 Discount Rate 12% pa     PV 0.098/(1+12%)^10/365 0.5/(1+12%)^30/365 .3045/(1+12%)^60/365 .103/(1+12%)^90/365   0.0977 0.4954 0.2989 0.1002 NPV 0.0977+0.4954+0.2989+0.1002   0.9921                 Yes, it should try the new policy     For calculating the NPV first the collections have to be determined after taking into account the discounts given on payment within 10 days and interest charged on payment made after 30 days. After that, the discount rate considered by the company is 12%p.a and days in a year are assumed to be 365. So using this rate the present value of the collection is calculated and a sum total of the amount gives the Net Present Value. The same method applies for both, the old policy as well as the new credit policy. Since the NPV of the new credit policy is higher the new credit policy should be implemented. 6.2 Cash Sale   Annual Sale 5 COGS -3.2 NPV 1.8 Credit sale           Annual Sale 5*(1+25%)           6.25           Collection from Sale     30 days 60 days 90 days Bad Debt Total   6.25*20% 6.25*40% 6.25*37% 6.25*3%     1.25 2.5 2.3125 0.1875 6.25 Discount…

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