Q2. Annual Sales of Fish Academy is $70,000,000. Currently it is allowing customers an n30 credit term.

Now the planning team of Fish academy has two revised credit terms (Project 1 and Project 2) to think about. Now, as a part of the Planning team you have to decide which project will serve better for the company. Cost of capital of your company is 12%; along with a bank borrowing rate of 8%. The Increment sales are assumed to last forever at constant rate. Project 1 Variables Projected Value Initial Investment $0 Sales Increase +3% Payment Terms n30 COGS 65% of Sales Inventory to production Lag 30 days Production-to-Sales Lag 10 days Credit Term n60

Project 2 Variables Projected Value Initial Investment $0 Sales Increase +5% Payment Terms n40 COGS 60% of Sales Inventory to production Lag 35 days Production-to-Sales Lag 15 days Credit Term n80 For the calculations: use 365 days as one year. Apart from that you may need followings: PV= FVn / {1+(k X n/365)} NPV= CF per period / IR per period

Q4. Abeedur Rahman (a wonderful human being!) is the newly hired financial analyst of Bart & Homer company. Now, CFO Ms.Saif gave him his first assignment of producing a Purchasing Schedule and Cash Budget for the months of February, March and April. For his assistance she provided her following historical financial data. Bart & Homer company has the policy of collecting all of its Receivables at the end of the same month (when the sales were made). In case of credit purchases, the company s payables are outstanding an average of one month. Management also tries to maintain ending inventory, for any given month, two third to that month s cost of goods sold. Balance sheet, January Asset Liabilities and Owners Equity Cash 70,000 Accounts Payable 40,000 Inventory 50,000 Common Stock 100,000 Accounts Receivables 30,000 Retained Earnings 10.000 Total 150,000 Total 150,000 Projected Income Statement February March April Sales 50,000 100,000 150,000 COGS 30,000 60,000 90,000 GP 20,000 40,000 60,000 FC 10,000 10,000 10,000 NP 10,000 30,000 50,000 Now, help him to prepare purchasing schedule and Cash Budget for the months (February, March & April)