Geo-M is considering adding a cash discount to its credit terms. If Geo-M offers 3/11 net...
Geo-M is considering adding a cash discount to its credit terms. If Geo-M offers 3/11 net 30 rather than its current net 30 policy, what annualized rate is the company charging customers who do not take the discount? Assume a 365-day year.
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![Nominal cost of trade credit: [D/(1-D)] x [360/n] Dis discount rate n is Number of days after discount period Cost of not tak](http://img.homeworklib.com/questions/63d0b200-6f24-11ea-a61e-75c03e1139cc.png?x-oss-process=image/resize,w_560)
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Geo-M is considering adding a cash discount to its credit terms.
If Geo-M offers 3/11 net...
Geo-M is considering adding cash discount to its credit terms. If Geo-M offers 3/11 net 30...
Geo-M is considering adding cash discount to its credit terms. If Geo-M offers 3/11 net 30 rather than its current net 30 policy, what annualized rate is the company charging customers who do not take the discount? Assume a 365-day year.
8. Geo-M is considering adding a cash discount to its credit terms. If Geo-M offers 3...
8. Geo-M is considering adding a cash discount to its credit terms. If Geo-M offers 3 / 11 net 30 rather than its current net 30 policy, what annualized rate is the company charging customers who do not take the discount? Assume a 365-day year.
8. Geo-M is considering adding a cash discount to its credit terms. If Geo-M offers 3/11...
8. Geo-M is considering adding a cash discount to its credit terms. If Geo-M offers 3/11 net 30 rather than its current net 30 policy, what annualized rate is the company charging customers who do not take the discount? Assume a 365-day year. 9. Fickle Sickles collects 15,000 checks per 365-day year with average amount $170 and total delay 5 days. A lockbox system would reduce that delay to 3 days, and it would also reduce FISI's check processing costs...
7. Box Lock has annual sales of $4 million and is considering implementing a lockbox system,...
7. Box Lock has annual sales of $4 million and is considering implementing a lockbox system, which would reduce customer collection float by four days. Box Lock has a cost of capital of 13 percent. The annual after-tax cost of the lockbox system is $2000. Assume a 365-day year, should Box Lock implement the system? What would be the benefit, in dollar amount, if it did? 8. Geo-M is considering adding a cash discount to its credit terms. If Geo-M...
Initiating a cash discount Gardner Company currently makes all sales on credit and offers no cash discount. The firm is...
Initiating a cash discount Gardner Company currently makes all sales on credit and offers no cash discount. The firm is considering offering a 4% cash discount for payment within 15 days. The firm's current average collection period is 60 days, sales are 40,000 units, selling price is $48 per unit, and variable cost per unit is $30. The firm expects that the change in credit terms will result in an increase in sales to 41,000 units, that 70% of the...
A supplier to your firm offers credit terms of 2/15 net 45 however, your firm never takes advanta...
A supplier to your firm offers credit terms of 2/15 net 45 however, your firm never takes advantage of the discount but instead always pays full price on day 45. Your finance intern claims that your firm would be better off borrowing money from an existing but little used line of credit at a current annualized rate of 8%, pay the firm providing credit at the end of the discount period (day 15) and to then repay the line of...
Dome Metals has credit sales of $378,000 yearly with credit terms of net 60 days, which...
Dome Metals has credit sales of $378,000 yearly with credit terms of net 60 days, which is also the average collection period. Dome does not offer a discount for early payment, so its customers take the full 60 days to pay . a. What is the average receivables balance? (Use a 360-day year.) AVERAGE RECIEBLES BALANCE b. What is the receivables turnover? ? (Use a 360-day year.) RECIEVABLES TURNOVER Dome Metals has credit sales of $126,000 yearly. If Dome offers...
1. You are currently re-evaluating your payables policy. Your current supplier offers terms of 1.5/10, net...
1. You are currently re-evaluating your payables policy. Your current supplier offers terms of 1.5/10, net 40 with a late payment fee of 1.5% per month. A supplier wanting your business is willing to offer terms of 2.5/5, net 60 with no stated late payment fee. Your annual borrowing rate is 18%. Assume a 365-day year. a. How long should you delay payment given the terms of your current supplier? Prove your answer by relating the annualized cost of the...
Cash Discount Go For Broke Mining was extended credit terms of 3/15 net 30 EOM. The...
Cash Discount Go For Broke Mining was extended credit terms of 3/15 net 30 EOM. The cost of giving up the cash discount, assuming payment would be made on the last day of the credit period, would be ________. If the firm were able to stretch its accounts payable to 60 days without damaging its credit rating, the cost of giving up the cash discount would only be ________.
McEwan Industries sells on terms of 3/10, net 30. Total sales for the year are $1,976,500;...
McEwan Industries sells on terms of 3/10, net 30. Total sales for the year are $1,976,500; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 86 days after their purchases. Assume 365 days in year for your calculations. A. What is the average amount of receivables? Round your answer to the nearest cent. Do not round intermediate calculations. $ B. What is the percentage cost of trade credit to customers...
8. Geo-M is considering adding a cash discount to its credit terms. If Geo-M offers 3 / 11 net 30 rather than its current net 30 policy, what annualized rate is the company charging customers who do not take the discount? Assume a 365-day year.
7. Box Lock has annual sales of $4 million and is considering implementing a lockbox system, which would reduce customer collection float by four days. Box Lock has a cost of capital of 13 percent. The annual after-tax cost of the lockbox system is $2000. Assume a 365-day year, should Box Lock implement the system? What would be the benefit, in dollar amount, if it did? 8. Geo-M is considering adding a cash discount to its credit terms. If Geo-M...
Initiating a cash discount Gardner Company currently makes all sales on credit and offers no cash discount. The firm is considering offering a 4% cash discount for payment within 15 days. The firm's current average collection period is 60 days, sales are 40,000 units, selling price is $48 per unit, and variable cost per unit is $30. The firm expects that the change in credit terms will result in an increase in sales to 41,000 units, that 70% of the...
1. You are currently re-evaluating your payables policy. Your current supplier offers terms of 1.5/10, net 40 with a late payment fee of 1.5% per month. A supplier wanting your business is willing to offer terms of 2.5/5, net 60 with no stated late payment fee. Your annual borrowing rate is 18%. Assume a 365-day year. a. How long should you delay payment given the terms of your current supplier? Prove your answer by relating the annualized cost of the...
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