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Barans Company currently has an average collection period of 55 days and annual sales of $1 billion. Assume a 365-day year.

Please help with steps to solve parts (b) and (c):

Barans Company currently has an average collection period of 55 days and annual sales of $1 billion. Assume a 365-day year.
a. What is the firm's average accounts receivable balance?
b. If the variable cost of each product is 65 percent of sales, what is the average investment in accounts receivable?c. If the equal-risk opportunity cost of the investment in accounts receivable is 12 percent, what is the total annual cost of the resources invested in accounts receivable?
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Finance-8098986.xls

BARANS COMPANY
Ans. b
Annual Sales
Average Collection Period (Days)
Number of days in a year
Average Accounts Receivable
(Annual Sales x 55 days/365 days)
Variable cost(% of sales)
Thus, investment...

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