1. A corporation proposes to market a new adding machine; the following estimates are made after careful investigation:

Cost of manufacture ................................

$15

Administrative expenses .........................

15

Selling expenses .....................................

35

Collection expenses and loss: $1 a month for 10 months. . . .

10

Total expense.................................

$75

Retail selling price ............................

100

Net profit ................................

$25

Terms of payment: $10 down, $10 a month.

Volume of business: 50 machines per month during 1st 2 mos.

150 " " " " 2d 2 mos.

300 " " " " 3d 2 mos.

500 " thereafter.

What will be the working capital required?

2. What factors are likely to raise or lower your estimated working capital in the above problem, and why?

3. Calculate the aggregate profits that will be realized up to the time the working capital is exhausted and the company is carrying its business on income alone.

4. What factors affect the amount of working capital of the May Department Stores? (pp. 767-768.)

5. From the balance sheet (pp. 761-763), can you tell how the Bethlehem Steel Company financed its inventory increases in 1917?

6. What was the turnover of (a) merchandise, and (b) working capital, of that company?

7. Is it profitable for that company to borrow working capital from its bank in order to discount its accounts payable? Give illustration.

8. If you reckon that there is one chance in ten of the failure of each of two obligors on a promissory note, what are the chances that the note will not be paid?

9. Why has single-name paper predominated over double-name paper in the investments of American banks?

10. What kinds of commercial paper can a member bank rediscount at its Federal Reserve Bank?

11. What is the advantage to a merchant of selling his notes through note-brokers, and why do banks prefer to buy much of their paper through a recognized reputable note-broker?

12. What is the advantage of registering commercial paper? (pp. 907-8.)

13. Are the accounts in the agreement (pp. 408-9) assigned outright or by way of collateral?

14. What is a "bankable proposition"?

15. A has a contract with the X Company to purchase its refuse at a very low figure - $50,000 a year. He can utilize the refuse and sell the resulting product for $200,000 a year, making a profit of $50,000 a year, after deducting all operating expenses and 6 per cent on the capital required. In order to do this, he must build and equip a factory at a cost of $500,000. (a) How much money, in all, will he require? (b) How can he raise the money necessary?

16. Debate the following question: Resolved, that the trade acceptance provides a better method of financing sales in America than the system of "open accounts."