Interest and 90-day Bank Loan

Accounts receivable modifications with bad debts A firm is evaluating an accounts receivable limiting that would increase bad debts from 2% to 4% of sales. Sales argon shortly 50,000 units, the selling price is $20 per unit, and the variable appeal 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 propose it? Explain. d. Considering all changes in costs and benefits, would you recommend the proposed change? Explain. e. Compare and deal your answers in parts c and d.P14-16Zero- fit account Union Company is considering brass of a zero equilibrise 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 give of $1,000 and maintain a $300,000 non provoke-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, anticipate that it has a 12% opportunity cost.P159Cost of bank add 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 oft interest (in dollars) will the firm pay on the 90-day loan? b. attend 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 everywhere every 90 days throughout the year under the aforementioned(prenominal) terms and circumstances.