The Green Hornet sells earnings forecasts for international securities. Its credit terms are 2/10, net 30

The Green Hornet sells earnings forecasts for international securities. Its credit terms are 2/10, net 30. Based on experience, 55 percent of all customers will take the discount. The firm sells 2,700 forecasts every month at a price of $1,100 each. What is the firm's average balance sheet amount in accounts receivable?    A.  $940,274 B.  $1,408,272 C.  $1,855,233 D.  $1,867,012 E.  $1,915,387 Average collection period = 0.55(10 days) + 0.45 (30 days) = 19 days Average A/R = 2,700 ($1,100) (12/365) (19) = $1,855,233

85.	A firm offers terms of 2/9, net 41. What effective annual interest rate does the firm earn when a customer does not take the discount?    A.  18.67 percent B.  20.45 percent C.  23.37 percent D.  25.34 percent E.  25.92 percent EAR = [1 + (0.02/0.98)]365/(41 - 9) - 1 = 25.92 percent

86.	Music City, Inc. has an average collection period of 62 days. Its average daily investment in receivables is $50,000. What are the annual credit sales?    A.  $268,407 B.  $277,109 C.  $294,355 D.  $325,893 E.  $767,123 Annual credit sales = $50,000 (365/62) = $294,355