1. You need to borrow $175,000 in order to buy a new house. The loan will be for 30 years. In excel, compute the monthly payment amounts for interest rates of 0% to 5%, in 50 basis point increments. Which of the following is true?
All else equal, a higher interest rate will result in a lower monthly payment.
All else equal, a higher interest rate will result in a lower effective rate.
All else equal, a higher interest rate will result in a higher monthly payment.
All else equal, a higher interest rate will result in a higher compounding frequency.
2. A firm has an average annual accounts receivable balance of $3,200,000, an average annual inventory balance of $2,700,000, annual sales of $15,000,000, and annual cost of goods sold of $13,500,000. How many days does it take the firm to sell its inventory and collect the payment on the sale (assume all sales are on credit)?
a. 150.87
b. 143.57
c. 73
d. 4.87