2) PT Tani Mukti, a firm specializing in fertilizers, currently sells on credit only and does not offer any discounts. It has sales ...... (decide by yourself) units in the current period. The credit period is ...... (decide by yourself) days. The average collection period is ....... (decide by yourself) days, and bad debts are 2 % of sales. The selling price per bag is $ 15, and the variable cost per bag is $ 12. The required rate of return on equal-risk investments is 20 %.  To improve working capital management in the coming period, the company plans to create several program scenarios. Calculate and   analyze on the each following scenarios, then which scenario should be implemented and why ? These scenarios are (Note: Use a 365-day year) :
    a. Relaxation of credit standards
         * The plan is expected to result increase 10 % in sales
         * Average collection period will increase 50 %
         * Bad debts are expected to increase to 5 % of sales.

     b. Initiating a 5 % cash discount for payment within 15 days
         * Sales will increase 15 %, and 80 % of sales will take the discount
         * Average collection period will fall 50 %

     c. Shortening the credit period by 30 %.
         * It is estimated will reduce the average collection period 10 %
         * The bad debts are expected to decrease to 1% of sales
         * It is believed that sales will decline 10 %

     d. Lengthening the credit period 50 %
         * All customers will continue to pay on the net date
         * The proposal is expected to increase credit sales by 10 %
         * However, bad debts are expected to increase 4 % of sales

3. PT Mustika  is considering manufacturing protective cases for a popular new smartphone. Management decides to borrow Rp ........... (decide by yourself) from each of two banks, Sejahtera Bank and Sentosa Bank. On the day that you visit both banks, the quoted prime interest rate is  6.5 %. Each loan is similar in that each involves a ..... -day note (decide by yourself, less than 1 year), with interest to be paid at the end of maturity days. Assume a 365-day year.
     Sejahtera Bank. The interest rate was set at 1.5 % above the prime rate on Sejahtera Bank's fixed-rate note. Over the loan period, the rate of interest on this note will remain at the 1.5 % premium over the prime rate regardless of fluctuations in the prime rate.
     Sentosa Bank. The bank sets its interest rate at 1 % above the prime rate on its floating-rate note. The rate charged over the  loan period will vary directly with the prime rate.

For the Sejahtera Bank loan:

a. Calculate the total dollar interest cost on the loan.
b. Calculate the interest rate on the loan.

c. Assume that the loan is rolled over each loan period throughout the year under identical conditions and terms. Calculate the effective annual rate of interest on the fixed-rate, Sejahtera Bank note.

For the Sentosa Bank loan:
d. Calculate the initial interest rate.

e. Assuming that the prime rate immediately jumps to 8 % and after the first half of maturity it drops to 7.5 %, calculate the interest rate for the first half of maturity  and the second half of maturity of the loan.

f. Calculate the total IDR interest cost.

g. Calculate the loan rate of interest.

h. Assume that the loan is rolled over each loan period throughout the year under the same conditions and terms. Calculate the effective annual rate of interest.

i. Which loan would you choose, and why ?

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