FIN3702 ASSIGNMENT 2 SEMESTER 1 2023

FIN3702
ASSIGNMENT 2
SEMESTER 1
2023
WITH ANSWERS 100% CORRECT

,QUESTION 1

The cost of giving up a cash discount under the terms 5/20 net 120 assuming a 365-day
year is …

1. 15.00%.

2. 15.80%.

3. 18.94%.

4. 19.21%.



The correct answer is option 4.

19.21%

Cost of giving up a cash discount =

= = 19.21%




Gitman et al 2010, chapter 15:607
Gitman et al 2014, chapter 16:625




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, QUESTION 2

A firm has actual sales in November of R1 000 and projected sales in December and
January of R3 000 and R4 000 respectively. The firm makes 15% of sales for cash,
collects 45% of its sales one month following the month of sale and collects the balance
two months following the month of sale. The firm’s total expected receipts in January are
…

1. R 700.

2. R1 900.

3. R2 100.

4. R2 350.


R600 + R1 350 + R400 = R2 350

Month November December January
(actual) (forecast) (forecast)
Forecasted sales (R) 1 000 3 000 4 000
Cash sales (R) 15% 150 450 600
Credit sales (R) 45% - 450 1 350
Credit sales (R) 40% - - 400
Totals (R) 2 350



Prescribed book 2010 edition: chapter 3, page 107
Prescribed book 2014 edition: chapter 4, page 118




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