Answer : take the cash discount, financing the purchase with the line of credit, the cheaper source of funds |
If you have any doubt then please ask |
Please do rate the answer |
1 pts Question 5 A firm is offered credit terms of 2/10 net 45 by most...
A. A firm bought some material with a purchase price of $1,000 and credit terms of 1/10 net 30. The firm paid for these goods on the 5th day after the date of sale. What is the cost of giving up the cash discount? How much must the firm pay for the goods. B. A firm is offered credit terms of 2/10 net 45 by most of its suppliers. The firm also has a credit line available at a local...
Assume the credit terms offered to your firm by your suppliers are 2.9/5, Net 30. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30. The effective annual cost of the trade credit is _____%. (Round to two decimal places.)
Assume the credit terms offered to your firm by your suppliers are 3.3/4, Net 30. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30.
Assume the credit terms offered to your firm by your suppliers are 3/15, net 60. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 60. the cost of trade credit is ____%
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...
Suppose the credit terms offered to your firm by its suppliers are 2/10, net 30 days. Your firm is not taking discounts, but is paying after 22 days instead of Day 30. You point out that the nominal cost of not taking the discount and paying on Day 30 is approximately 37%. But since your firm is neither taking discounts nor paying on the due date, what is the effective annual percentage cost (not the nominal cost) of its costly...
Simple Simon's Bakery purchases supplies on terms of 1/10, Net 25. If Simple Simon's chooses to take the discount offered, it must obtain a bank loan to meet its short-term financing needs. A local bank has quoted Simple Simon's owner an interest rate of 12% on borrowed funds and no origination fees. Should Simple Simon's enter the loan agreement with the bank in order to begin taking the discount? Yes, because the trade credit is cheaper No, because 12% isn't...
Dome Metals has credit sales of $360,000 yearly with credit terms of net 45 days, which is also the average collection period. a. Assume the firm offers a 5 percent discount for payment in 10 days and every customer takes advantage of the discount. Also assume the firm uses the cash generated from its reduced receivables to reduce its bank loans which cost 12 percent. What will the net gain or loss be to the firm if this discount is...
Assume the trade credit terms offered to your firm by your suppliers are 3/5, Net 30. Calculate the cost of the trade credit (effective annual rate) from day 5 until day 30 when you paid. 25.37% 55.94% 29.30% 21.61%
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...