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    Net Profit and Float

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    Question 20
    Beguiling Telecom Corp.'s customers send payments by check, which spend an average of 2 days in the mail. Processing of the checks requires 2 days, and BTC's bank delays availability of the checks for 2 days. Customers send their checks an average of 5 days after they receive their statements. Beguiling Telecom has _______ of collection float.

    a. 4
    b. 6
    c. 7
    d. 9
    e. 11

    Question 21
    Bellingham Banners currently has average collection period of 34 days, annual sales of 300,000 units at selling price $30 a piece, and contribution margin $19. It is considering a tightening of credit policy that would reduce average collection period to 20 days and reduce sales to 298,000 units. There are no bad debts, and BB has required return of 9%. What is the net profit from tightening the credit policy?

    a. - $26,608
    b. - $26,500
    c. -$10,608
    d. -$9,580
    e. $4,115

    © BrainMass Inc. brainmass.com June 3, 2020, 9:21 pm ad1c9bdddf
    https://brainmass.com/business/capital-budgeting/net-profit-and-float-178564

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