Sales = $24m Credit Terms = 2/10, net/30 Borrowing rate = 17% 30% customers will avail discount and 70% will not avail. Is this a viable proposition?
Q: Knights Technologies is considering changing its credit terms from 2/15, n/30 to 3/10, n/30 to speed…
A: Outstanding sales days is a measure that shows how long it takes for a company to get money for a…
Q: The Berry Corporation is considering a change in its cash-only policy. The new terms would be net…
A: Profit under current Policy: Price per unit – Cost per unit $65- $35 =$30 Profit for 2750 units:…
Q: A firm offers terms of 5/14, net 50. What effective annual interest rate does the firm earn when a…
A: This term means seller will give 5% discount to the purchaser if he or she paid the outstanding…
Q: KK Corporation is analyzing its option to restrict its credit terms. Current sales level is…
A: Credit Policy Evaluation is calculated using total cost incurred under different scenarios and the…
Q: JJ Corporation is analyzing its option to restrict its credit terms. Current sales level is…
A: solution below are the given details about both situations For current Current sales level…
Q: The credit terms of a firm currently is “net 30”. It is considering to change it to “net 60”. This…
A: we are authorized to do three sub part , please re post the remaining sub part Present collection…
Q: Show me the solution please, thank you! ABC is deciding to give a cash discount of 1% if the…
A: Solution: In the given question benefit of the policy need to be calculated. Analysis of benefits…
Q: DBA Company is considering changing its credit terms from 2/15, net 30 to 3/10, net 30 in order to…
A: Days' sales outstanding is a financial ratio that helps in evaluating the performance of the…
Q: Your company is considering three options for financing its short term operations Borrow Tk.20…
A:
Q: Problem: A company's credit policy is based on terms of net 60, but it expects to average a days…
A: The cost of goods sold = 15 million * 60% = 9000000 Funds blocked on an average in an year = 9000000…
Q: A firm is offered credit terms of 2/10 net 45 by most of its suppliers. The firm also has a credit…
A: Credit term refers to the term and conditions specified in a credit transaction by the seller to the…
Q: XYZ is evaluating whether to loosen its credit terms from 2/10, net 30 to 3/10, net 30. At present,…
A:
Q: Sonata Company is considering changing its credit terms from 2/15, net 30 to 3/10, net 30 in order…
A: The answer is stated below:
Q: You owe 25,000 on a credit card that changes 1.5% interest each month. You can pay 2,500 each month…
A: Let an be amount on a credit card that charges 1.5% interest each month person pay $2,500 each…
Q: which one is correct please confirm? Q9: "a 90 day USD T-bill with a face value of USD1,000,000…
A: Government also issues various types of securities to arrange the funds. T-bill is one of them which…
Q: ZLX is seeking a bank to place short-term deposits at a good rate. Bank A is offering 3.5% APR…
A: EAR stands for an effective annual rate, which is used to calculate the real adjusted necessary…
Q: What is the price of a $1 million T-bill that has a discount yield of
A: Treasury Bill, also referred to by the name T-Bill is a short term money market instrument that is…
Q: Why is some trade credit called free while other credit is called costly? If a firm buys on terms…
A: Trade Credit: The trade credit denotes to the credit sale. This credit be indebted money for the…
Q: You would like to purchase a T-bill that has a $20,000 face value and is 309 days from maturity. The…
A: Discount yield = (Par value - current price) / par value * 360 days / days to maturity
Q: Consider a $100,000 loan balance (EAD) Suppose a Borrower is in class 5 with a Probability of…
A: Expected Loss Rate = PD * LGD = 0.04% * 50% =0.0002%
Q: Quantitative Problem: Adams Manufacturing Inc. buys $9.1 million of materials (net of discounts) on…
A: Additional credit = 9,100,000*(50-10)/365 Additional credit = 997260.27
Q: %, collections within the discount period is 40% and the average age will be 22 days. The variable…
A: The costs decline significantly with experience due to the learning curve phenomenon and efficiency.…
Q: Johnson Electronics is considering extending trade credit to some customers previously considered…
A: The sum of incremental sales minus additional costs and depreciation equals incremental earnings.…
Q: Knights Technologies is considering changing its credit terms from 2/15, n/30 to 3/10, n/30 to speed…
A: Outstanding sales days is a measure that shows how long it takes for a company to get money for a…
Q: Your company is considering granting credit to a new customer. The variable cost per unit is RO 20,…
A: Calculation of break-even probability of default: Answer: The break-even probability of default is…
Q: Proposal #1 would extend trade credit to some customers that previously have been denied credit…
A: Since we answer up to three sub-parts, we shall answer the first three. Please resubmit a new…
Q: Jazz Auto Supply is not satisfied with its present credit policy. A proposal under consideration is…
A: Accounts receivable refers to the amount that is owed by the customer for the goods purchased by…
Q: Suppose Mr. Juice needs a $1,660 loan and the bank, Wonderland Banking, has decided that this guy…
A: Answer:- Loan meaning:- A loan can be defined as the amount of payment of money to another party in…
Q: From which of the following banks would cost be higher ? Bank W - 22% interest payable at maturity…
A: Interest A charge paid by the borrower to the lender for using the money is known as interest. There…
Q: the following Information Which financing metnod has lowest Ihterest cost? How much interest savings…
A: Given: Loan amount = R2,500,000 Term = 180 days Rate = 8%+2.5% = 10.5%…
Q: Suppose you are given S100 in period I (today), $200 in period 2, and $300 in period 3. Given an…
A: "In the context of multiple questions guidelines we need to solve the first question if no question…
Q: ILTIS UI 1730, net 70, and decides to forgo the trade credit discount and pay on the net day, what…
A: The question is based on the concept of business accounting.
Q: A financial institution uses a loan base rate of 4.35% and sets the credit risk premium at 6.68%.…
A: Given: Loan origination Fee LOF = 1.5% Base loan rate = 4.35% Credit risk premium CRP = 6.68%…
Q: National Co. is considering changing its credit terms from 2/15, net 30 to 3/10, net 30 in orde to…
A: Cost Accounting- Cost accounting is a process of accounting wherein all the costs related to any…
Q: How much is the effective cost if you need to borrow $400,000 for one year with $475,000 line…
A: Interest rate = 20% Unused funds = Total credit line - Amount borrowed = $75000 Fees on unused…
Q: .A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and…
A: solution given credit terms =3/15 net 30 days firm pays in 50 days the extra days taken =…
Q: Bulldogs inc. will least likely experience which of the following if the firm shifts its credit…
A: Given information, Existing credit term = n/25 New credit term = 3/10, n/25 Currently, company…
Q: Your company is evaluating a switch from a cash policy to a net 30 policy. The price per unit is…
A: Effective interest rate is interest rate considering the effect of compounding and this annual rate…
Q: Two types of borrowers, type A and B, are requesting a loan in the amount of $44,000. Type A repays…
A: Loan amount = $44000 Type A repayment probability = 1 Type B repayment probability = 0.76 Fraction…
Q: What is the effective annual return Friendly's earns on this lending business? (Do not round…
A: Effective Annual Rate is the rate that is earned or charged on the principal amount. It shows the…
Q: Why is some trade credit called free while other credit is called costly? If a firm buys on terms of…
A: Trade credit is a form of debt which is arise from selling goods on credit. It is reflected in…
Q3) Discount
- Sales = $24m
- Credit Terms = 2/10, net/30
- Borrowing rate = 17%
- 30% customers will avail discount and 70% will not avail. Is this a viable proposition?
Step by step
Solved in 3 steps
- Q. 7. Find the complement rates (where none exists, enter an "*") and the net price using the complement method. Do not round until the final answer. List Price $2,800 Trade Discounts 25%, 15%, 10% First Complement Rates Second Third Net PriceSuppose you are offered $7,100 today but must make the following payments: 1 2 Cash Flows ($) O $7,100 1-3,800 2-2,500 3 -1,600 4 -1,400 Year 4 6. 7 9. 10 11 What is the IRR of this offer? (Do not round intermediate calculations. Enter your ans 12 a. 13 14 15 16 17 b. If the appropriate discount rate is 10 percent, should you accept this offer? 18 19 multiple choice 1 20 21 Reject Ассept 22 23 24 25 C. If the appropriate discount rate is 19 percent, should you accept this offer? 26 27 multiple choice 2 28 29 Аcсept Reject 30 31 32 33 What is the NPV of the offer if the appropriate discount rate is 10 percent? (A negative ar What is the NPV of the offer if the appropriate discount rate is 19 percent? (A negative ar 34 d-1. 35 d-2. 362. A certain product payment offers 30/25 / 18/ 5 discounts. What is the total net price rate? 3. What is the price difference if a net price of Php 1,456.80 has a single discount of 40 % and a discount series of 20 % , 15 % , 5 %. 4. Compare the discount offer between a discount series of 20 % ,15 % and 10 % and a single discount of 45 % 5. Which discount will you chose in buying the same brand of air conditioning unit of Php 10,800. A discount of 15 % and 5 % or a discount of 10 % , 8 % , and 5%.
- 3. Answer the following questions based on the information below Current credit policy(n/a) Proposed credit policy (net 30) Price (RO) 15 17 Variable cost per unit (RO) 8. 12 Quantity 200,000 300,000 Monthly rate 1.25% a. What is the incremental cash flows from switching credit policies? b. What is the cost of switching? c. What is your recommendation? d. We assume that the variable cost and the price per unit remain stable as in the current policy, calculate and interpret the break-even sales increase. e. What is the break-even probability of default if we assume one time scale? Interpret.What would the NPV be if the discount rate was 8%, and how would I solve for that?What is the NPV of the project if the discount rate is 7%? Answer with two decimals. Project A CF0: -13,884 CF1: 3,527 CF2: 4,736 CF3: 9,991 CF4: 7,860 CF5: 2,160 CF0: -13,884 CF1: 3,527 CF2: 4,736 CF3: 9,991 CF4: 7,499 CF5: 2,160
- Directions. Table Completion: Show your solution. 10 points LIST PRICE TRADE DISCOUNT DISCOUNT RATE NET PRICE P11,120.04 P1,850.50 P3,090.13 8.5% P501.25 P27,498.753. Answer the following questions based on the information below Current credit policy(n/a) Proposed credit policy (net 30) Price (RO) 10 12 Variable cost per unit (RO) Quantity 100,000 150,000 Monthly rate 2% What is the incremental cash flows from switching credit policies? a. b. What is the cost of switching? C. What is your recommendation? d. Assume that the variable cost and the price per unit remain constant, what is the break- even sales increase? Interpret.The early payment discount being considered in change 3 is “3/20 net 90”. Calculate the effective annualised cost of the discountIf Sphinx can borrow funds in the short-term money markets at 20%, should the trade discount be taken by Sphinx?
- 2. If you receive $249 each quarter for 4 quarters and the discount rate is 0.08, what is the present value? (show the process and can use financial calculator)r=0% on deposits. Consumer needs to borrow $50 loan and the consumer has uncertain income of y=50,80,100 each with 1/3 chance. There may be multiple equilibrium R's. What is the R that's other than 0 or infinity? R=____%.If your supplier offers 3/5 net 28, what is the implied interestrate if you choose to forgo the discount and pay on day 28?