Reference no: EM132901211

Rauch Co. has the following selected information from its most recent annual financial statements:

                                                   20X8 $                 20X7 $

Accounts receivable              223,400             226,700

Inventories                         121,700                 151,600

Accounts payable                 177,400                153,900

Sales (all on credit)                779,800             798,300

Cost of goods sold                 350,910             359,235

Operating expenses                 77,400                78,900

• Operating expenses include depreciation and amortization of $10,500 in 20X8 and $10,100 in 20X7. The company pays 8% annual interest on borrowings from its bank.

Problem 1: What is the interest cost on the cash required to finance the company's estimated cash conversion cycle in 20X8? (For calculations, use 365 days in a year and round all calculations to the nearest day.)

a) $12,819

b) $17,433

c) $18,117

d) $22,221