1. Buskirk Construction buys on terms of 2/15, net 60 days. It does not take discounts, and it typically pays on time, 60 days after the invoice date. Net purchases amount to $500,000 per year. On average, how much "free" trade credit does the firm receive during the year? (Assume a 365-day year, and note that purchases are net of discounts.)
a. $19,315
b. $16,644
c. $18,699
d. $20,548
e. $24,863
2. Which of the following statements is CORRECT?
a. To find the MIRR, we discount the TV at the IRR.
b. The IRR method appeals to some managers because it gives an estimate of the rate of return on projects rather than a dollar amount, which the NPV method provides.
c. The discounted payback method eliminates all of the problems associated with the payback method.
d. When evaluating independent projects, the NPV and IRR methods often yield conflicting results regarding a project's acceptability.
e. A project's NPV profile must intersect the X-axis at the project's WACC.