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The Frame Supply Company has just acquired a large account and needs to increase its working capital
by $100,000. The controller of the company has identified four alternative sources of funds, which are
given below.
A: Pay a factor to buy the company's receivables, which average $125,000 per month and have an
average collection period of 30 days. The factor will advance up to 80 percent of the face value of
receivables at 10 percent and charge a fee of 2 percent of all receivables purchaseD. The controller
estimates that the firm would save $24,000 in collection expenses over the year.
Assume the fee and interest are not deductible in advance.
B: Borrow $110,000 from a bank at 12 percent interest. A 9 percent compensating balance would be
required.
C: Issue $110,000 of six-month commercial paper to net $100,000. (New paper would be issued every 6
months.)
D: Borrow $125,000 from a bank on a discount basis at 20 percent. No compensating balance would be
required.
Assume a 360-day year in all of your calculations.
The cost of Alternative B is:
A. 13.2 percent.
B. 10.5 percent.
C. 21.0 percent.
D. 12.0 percent.
Answer: A
Explanation:
Choice "c" is correct.
Choices "a", "b", and "d" are incorrect, per the above calculation.
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B. An internal auditor assessed the effectiveness of controls over payroll software, which he had helped implement with a previous employer.
C. An internal auditor performed an assurance engagement for the effectiveness of accounts payable access controls, one of which he previously helped to design.
D. An internal auditor, previously employed in the quality assurance operations area, performed a consulting engagement for the operations manager.
Answer: C
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B. Ertapenem
C. Cefepime
D. Vancomycin
E. Ceftaroline
Answer: C
Explanation:
Explanation
Ceftaroline covers MRSA, but it does not cover pseudomonas. Ertapenem does not cover pseudomonas.
Cefazolin does not cover MRSA nor Pseudomonas. Cefepime has pseudomonas coverage. Vancomycin does not cover gram negative bacteria.
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