1. Edgeworth Co. has an all-cash policy and sells 50 units per month at $920 a unit. The variable cost is $700 a unit. Should the firm grant 30 days of credit, it expects its sales would rise to 60 units without changes to price or costs per unit. The default rate on credit customers is predicted to be 2.25 percent. The monthly required return is .75 percent. What is the NPV of switching to a credit policy?
$240,333
$198,000
$366,667
$288,988
$346,333
$266,667
$258,778
2. Three years ago, Albert Brown was hired at as an accountant at Ace Computers, Inc. Ace has a 401(k) plan with a six year graduated vesting schedule that matches employee contributions dollar for dollar up to 3% of an employee’s salary. Albert earned $60,000 in year 1, $62,000 in year 2, and $64,000 In year 3. Each year, he contributed $5,000 to his 401(k) plan. He left Ace at the beginning of year 4. What amount of his 401(k) plan can he take with him?
a. $0
b. $15,000
c. $17,232
d. $20,580