FIN 419 ASSIST Career Path Begins/fin419assist.com FIN 419 ASSIST Career Path Begins/fin419assist.com | Page 3

12) Initiating a cash discount Gardner company currently makes all sales on credit and offers no cash discount. The firm is considering offering a 3% cash discount for payment within 15 days. The firm’s current average collection period is 60 days, sales are 40,000 units, selling price is $46 per unit, and visible cost per unit is $30. The firm expects that the change in credit terms will result in an increase in sales. 13) Degree of financial leverage North western Savings and Loan has a current capital structure consisting of $230,000 of 15% (annual interest) debt and 1,000 shares of common stock. The firm pays taxes at the rate of 30%. 14) Various Capital Structures Character Enterprises currently has $1.5 million in total assets and is totally equity financed. It is contemplating a change in its capital structure. Compute the amount of debt and equity that would be outstanding is the firm were to shift to each of the following debt ratios: 10%, 20%, 30%, 40%, 50%, 60%, and 90%. --------------------------------------------------------------------------------------- FIN 419 Final Exam Guide FOR MORE CLASSES VISIT www.fin419assist.com True/False (1point each) 1. The sole proprietor has unlimited liability; his or her total investment in the business, but not his or her personal assets, can be taken to satisfy creditors.