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Lesson #10, Assignment #2

# Lesson #10, Assignment #2 - Case Solutions Input boxes in...

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Case Solutions Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak and "Solver Add-In."

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Chapter 20 Credit Policy at Howlett Industries Input Area: Sales Default rate Current policy \$140,000,000 1.60% Option 1 \$160,000,000 2.50% Option 2 \$157,000,000 1.80% Option 3 \$170,000,000 2.20% Variable costs 45% Interest rate 6.00% Output Area: Daily interest rate Current policy: Daily sales \$383,561.64 Variable costs (daily) \$172,602.74 Defaults on sales (daily) \$6,136.99 Administrative costs (daily) \$8,438.36 Interest rate 0.6090% NPV \$32,074,287.51 Option 1: Daily sales \$438,356.16 Variable costs (daily) \$197,260.27 Defaults on sales (daily) \$10,958.90 Administrative costs (daily) \$14,027.40 Interest rate 0.6570% NPV \$32,696,132.28 Option 2:

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Daily sales \$430,136.99 Variable costs (daily) \$193,561.64 Defaults on sales (daily) \$7,742.47 Administrative costs (daily) \$10,323.29 Interest rate 0.8180%

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