Interest and 90-day Bank Loan

Accounts receivable sorts with bad debts A firm is evaluating an accounts receivable form that would increase bad debts from 2% to 4% of sales. Sales are before long 50,000 units, the selling price is $20 per unit, and the variable exist per unit is $15. As a result of the proposed change, sales are forecast to increase to 60,000 units. a. What are bad debts in dollars currently and under the proposed change? b. Calculate the cost of the marginal bad debts to the firm. c. Ignoring the additional profit contribution from increased sales, if the proposed change saves $3,500 and causes no change in the average investment in accounts receivable, would you preach it? Explain. d. Considering all changes in costs and benefits, would you recommend the proposed change? Explain. e. Compare and talk of your answers in parts c and d.P14-16Zero- end account Union Company is considering g everywherening of a zero repose account. The firm currently maintains an average balance of $420,000 in its disbursement account. As compensation to the bank for maintaining the zero balance account, the firm will have to pay a monthly earnings of $1,000 and maintain a $300,000 non interest group-earning deposit in the bank. The firm currently has no other deposits in the bank. Evaluate the proposed zero-balance account, and make a recommendation to the firm, expect that it has a 12% opportunity cost.P159Cost of bank give Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%, payable at maturity. (Note Assume a 365-day year.) a. How often interest (in dollars) will the firm pay on the 90-day loan? b. see the effective 90-day rate on the loan.c. Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 90 days throughout the year under the uniform terms and circumstances.