Langley Clinics, Inc., buys $400,000 in medical supplies a year (at gross prices) from its major...
Langley Clinics, Inc., buys $400,000 in medical supplies a year (at gross prices) from its major supplier, Consolidated Services, which offers Langley terms of 2.5/10, net 45. Currently, Langley is paying the supplier the full amount due on Day 45, but it is considering taking the discount, paying on Day 10, and replacing the trade credit with a bank loan that has a 10 percent annual cost. a. What is the amount of free trade credit that Langley obtains from Consolidated Services? (Assume 360 days per year throughout this problem.) b. What is the amount of costly trade credit? c. What is the approximate annual percentage cost of the costly trade credit? d. Should Langley replace its trade credit with the bank loan? Explain your answer. e. If the bank loan is used, how much of the trade credit should be replaced? Please show all formulas and calculations used to derive the answers. Thank you.
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Langley Clinics, Inc., buys $400,000 in medical supplies a year
(at gross prices) from its major...
16.4 Langley Clinics, Inc., buys $400,000 in medical supplies each y (at gross prices) from its...
16.4 Langley Clinics, Inc., buys $400,000 in medical supplies each y (at gross prices) from its major supplier, Consolidated Services, which offers Langley terms of 2 . 5/10, net 45. Currently, Langley this supplier? year Day 45, but it is considering taking the discount, paying on Day 10, and replacing the trade credit with a bank loan that has a 10 percent annual cost. a. What is the amount of free trade credit that Langley obtains from Consolidated Services? (Assume...
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Your company buys from a supplier who offers credit terms of 3/10 net 130. Discuss whether...
Your company buys from a supplier who offers credit terms of 3/10 net 130. Discuss whether your company should or should not pay cash for the goods it buys if it can borrow funds from the bank at 10% per annum. (Use a 360-day year for your computations.)
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate wi...
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Quantitative Problem: Adams Manufacturing Inc. buys $8.5 million of materials (net of discounts) on terms of...
Quantitative Problem: Adams Manufacturing Inc. buys $8.5 million of materials (net of discounts) on terms of 2/10, net 50; and it currently pays after 10 days and takes the discounts. Adams plans to expand, which will require additional financing. If Adams decides to forgo discounts, how much additional credit could it obtain? Assume 365 days in year for your calculations. Do not round intermediate calculations. Round your answer to the nearest cent. $ What would be the nominal and effective...
2 part Question. Please show work, thank you! Quantitative Problem: Adams Manufacturing Inc. buys $9.5 million...
2 part Question. Please show work, thank you! Quantitative Problem: Adams Manufacturing Inc. buys $9.5 million of materials (net of discounts) on terms of 2/10, net 50; and it currently pays after 10 days and takes the discounts. Adams plans to expand, which will require additional financing. If Adams decides to forgo discounts, how much additional credit could it obtain? Round your answer to the nearest cent. Do not round your intermediate calculations. Use 365 day in a year. $...
e) On November 30, Dizzy Controls Inc. borrowed $600,000 cash from its bank and signed a...
e) On November 30, Dizzy Controls Inc. borrowed $600,000 cash from its bank and signed a two-year promissory note bearing 7.4% annual interest due on the last day of the month. DATE ACCOUNT NAMES DEBIT CREDIT On November 29, Dizzy Controls Inc. issued a check for $82,400 to its accountant, Cooper Lybrand, for accounting services used to setup the company. DATE ACCOUNT NAMES DEBIT CREDIT On December 1, Dizzy Controls Inc. signed a two-year contract with Deluca Fix-it Corp. for...
The following items were selected from among the transactions completed by Sherwood Co. during the current year:
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Tony and Suzie graduate from college in May 2021 and begin developing their new business. They begin by offering clinics...
Tony and Suzie graduate from college in May 2021 and begin developing their new business. They begin by offering clinics for basic outdoor activities such as mountain biking or kayaking. Upon developing a customer base, they’ll hold their first adventure races. These races will involve four-person teams that race from one checkpoint to the next using a combination of kayaking, mountain biking, orienteering, and trail running. In the long run, they plan to sell outdoor gear and develop a ropes...
Complete the simplified settlement statement form (Excel spreadsheet provided) for the transaction described below. The various...
Complete the simplified settlement statement form (Excel spreadsheet provided) for the transaction described below. The various closing costs will be allocated between the parties in the customary way unless otherwise noted. Use a 360-day year and 30-day months for your prorations. Round dollar amounts to two decimal places for each step in your calculations. (Digits from 1 through 4 should be rounded down; digits from 5 through 9 should be rounded up.) The house at 314 Baker Street...
16.4 Langley Clinics, Inc., buys $400,000 in medical supplies each y (at gross prices) from its major supplier, Consolidated Services, which offers Langley terms of 2 . 5/10, net 45. Currently, Langley this supplier? year Day 45, but it is considering taking the discount, paying on Day 10, and replacing the trade credit with a bank loan that has a 10 percent annual cost. a. What is the amount of free trade credit that Langley obtains from Consolidated Services? (Assume...
Exercises #11 1. Xtra Corporation needs $50,000 for three months to finance its working capital. The company has arranged a short-term loan with a bank. The bank charges 8% annual interest rate with interest paid in advance. The bank also requires 5% of the borrowed amount as a compensating balance. Assume Xtra does not have money to serve as a compensating balance and pay interest upfront 1.1 How much Xtra have to borrow? 1.2 Find effective cost of bank loan...
e) On November 30, Dizzy Controls Inc. borrowed $600,000 cash from its bank and signed a two-year promissory note bearing 7.4% annual interest due on the last day of the month. DATE ACCOUNT NAMES DEBIT CREDIT On November 29, Dizzy Controls Inc. issued a check for $82,400 to its accountant, Cooper Lybrand, for accounting services used to setup the company. DATE ACCOUNT NAMES DEBIT CREDIT On December 1, Dizzy Controls Inc. signed a two-year contract with Deluca Fix-it Corp. for...
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