1.1) Effective rate on discounted loan (LO2) Sol Pine borrows $5,000 for one year at 13 percent interest. What is the effective rate of interest if the loan is discounted?

1.2)Net credit position (LO1) McGriff Dog Food Company normally takes 27 days to pay for average daily credit purchases of $9,530. Its average daily sales are $10,680, and it collects accounts in 32 days.

a. What is its net credit position? That is, compute its accounts receivable and accounts payable and subtract the latter from the former.

AR= average daily credit sales x Average collection period

AP= average daily credit purchases x Average payment period

b. If the firm extends its average payment period from 27 days to 37 days (and all else remains the same), what is the firms new net credit position? Has it improved its cash flow?