A seller is considering extending trade credit to an existing customer that buys on cash terms. The customer has just placed a sales order (cash terms) for immediate delivery of 400 units at a sales price per unit of $100. The customer states that they will increase their sales order by 10 units if they receive a 90-day credit period. Variable costs are $65 per unit and involve an immediate cash outflow. If the seller has an annual opportunity cost rate of 7.3%, what is the present value of the cash flows from extending credit to the customer? $14,000.00 $13,625.05 -$26,650.00 $40,275.05
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- You place an order for 1,500 units of Good X at a unit price of $52. The supplier offers terms of 1/25, net 40. How long do you have to pay before the account is overdue? If you take the full period, how much should you remit. What is the discount being offered? how quickly must you pay to get the discount? If you do take the discount, how much should you remit? if you don't take the discount, how much interest are you paying implicitly? How many day's credit are you receiving?a seller has offered credit terms of 2.5/5 net 50 to a customer that has agreed to immediately purchase 500 units at a sales price per unit of $100. variable costs are $65 per unit and involve an immediate cash outflow. the seller has an annual opportunity cost rate of 7.3%. based on this information, what is the present value of the net flows associated with the cash discount terms? is it - 16,201; 26,750; 81,201; 32,500Assume that Cane expects to produce and sell 90,000 Betas during the current year. One of Cane’ssales representatives has found a new customer who is willing to buy 5,000 additional Betas for a priceof $39 per unit. What is the financial advantage (disadvantage) of accepting the new customer’s order?
- Show me the solution please, thank you! ABC is deciding to give a cash discount of 1% if the customers pay on the tenth day. It originally offers a credit term of n/30. Without the cash discount, credit sales would be P6,750,000 with an average age of 27 days. With the cash discount, credit sales are forecasted to increase by 15%, collections within the discount period is 40% and the average age will be 22 days. The variable cost rate is 60% while the effective interest rate that ABC uses for forecasting is 8%. Using a 360-day year, how much is the net benefit or (cost) of the new policy?You place an order terms of 2/25, net 45. 000 units of Good X at a unit price of $47. The supplier offers a-1. How long do you have to pay before the account is overdue? a-2. If you take the full period, how much should you remit? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b-1. What is the discount being offered? (Enter your answer as a percent.) b-2. How quickly must you pay to get the discount? b-3. If you do take the discount, how much should you remit? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c-1. If you don't take the discount, how much interest are you paying implicitly? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c-2. How many days' credit are you receiving? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)a. Assume that the cost of goods sold is 60% and that the monthly discount rate is 1%. Looking at the values in the exhibit above, you note that the average monthly revenue for a subscribed customer rises as the company sends more emails. In addition, the average monthly revenue for an unsubscribed customer also rises as the company sends more emails. What could explain both of these patterns? b. Calculate the 6-month LTV for each of the four tested email frequencies. Please show the spreadsheet with your calculations and be clear about any assumptions you are making. c. Based on this test, how many emails-per-week should the company be sending to its customers? This email frequency should apply to all customers; the company doesn't want to implement a different email frequency for different kinds of people
- You buy goods with a list price of $500. You return goods that are defective, having a list price of $60. You are entitled to a trade discount of 30%. The seller paid $20 freight on your behalf and added the amount to the invoice. You are offered a 4% cash discount if you pay the invoice within 15 days. What is the net amount you should pay the supplier if you pay within the discount period?You have just purchased new goods worth 10,000 EUR from your supplier. Your supplier offers you to pay within 35 days. If you pay within the first 5 days, you get a discount of 1%. You know that he might accept a further delay, because he has a quite bad receivables management, but if he notices, which you estimate has a probability of roughly 50%, you might get an additional fee of 1000 EUR. You need your next delivery in 60 days and you know he will not deliver the new goods unless you pay the outstanding invoice. When would you pay? Why? What is the effective interest rate?Solve each of the following questions using both pricing formulas and Excel. 5. You are managing a small company and need to buy some equipment for your product line. Kangaroo Manufacturing is offering free credit on a $20,000 piece of equipment. You pay down $2,000 and then $600 a month for the next 30 months. Turtle Machines does not offer free credit but will give you $2,000 off the list price. If the rate of interest is 10% (APR) a year, which company is offering a better deal?
- What is the pricing equation and how is it used? If the product list price is $1000 and the retailer typically discounts the product at the end of the season by 20% on list price as an Incentive to sell the remaining 20% of the inventory to make room for next season’s products, what amount of upsell effort (Extra Fees for services) would be required all season to achieve an average Final Price paid by customers of 6% over list price over the entire season? Show your equations and calculations.What is the pricing equation and how is it used? If the product list price is $1000 and the retailer typically discounts the product at the end of the season by 20% on list price as an Incentive to sell the remaining 20% of the inventory to make room for next season’s products, what amount of upsell effort (Extra Fees for services) would be required all season to achieve an average Final Price paid by customers of 6% over list price over the entire season? Show your equations and calculations. short answerMicrobiotics currently sells all of its frozen dinners cash-on-delivery but believes it can increase sales by offering supermarkets 1 month of free credit. The price per carton is $170, and the cost per carton is $100. The unit sales will increase from 1,120 cartons to 1,180 per month if credit is granted. Assume all customers pay their bills and take full advantage of any credit period offered. a. If the interest rate is 1% per month, what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If the interest rate is 1.5% per month, what will be the change in the firm's total monthly profits on a present value basis if credit is offered to all customers? (Do not round intermediate calculations. Round your answer to 2 decimal places. Negative amount should be indicated by a minus sign.) c. Assume the interest rate is 1.5% per…