Working Capital Finance

discounts; 40% pay on the 30th day; and the remaining 30% pay, on the average, 40 days after  the purchase. Assuming 360 days per year, what is the the average collection period. a. 40 days. c. 20 days b. 15 days ys.. d. 27 days ays. Questions 10 and 11 are based on the following information. A company has a 10% cost of borrowing and incurs fixed costs of $500 for obtaining a loan. It has stabl stable, e, pred predict ictabl ablee cash cash flow flows, s, and the the esti estimat mated ed tota totall amou amount nt of net new cash cash needed needed for  for  transactions for the year is $175,000. The company does not hold safety stocks of cash. 10. When When the average average cash balance balance of the company company is higher, higher, the