A company estimates that 1% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $500. How much should they charge to have an expected value of $25 on each warranty?
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A company estimates that 1% of their products will fail after the original warranty period but within 2 years of the purchase, with a replacement cost of $500. How much should they charge to have an expected value of $25 on each warranty?
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- A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. What is the effective annual cost of not taking this discount? (Assume a 365-day year.)A retailer owes a wholesaler $900,000 due in 45 days. If the payment is 15 days late, there is a 1% penalty charge. Since the bill isn't due immediately, the retailer can invest the $900,000 in a certificate of deposit and make money on the interest. The retailer has two options: a 45-day certificate of deposit (CD) earning 7% per year simple interest or a 60-day certificate earning 8% per year simple interest. How much interest would the retailer earn? Use 360 days in a year. (Round your answers to the nearest cent.) 45-day certificate $ 60-day certificate $ If the retailer opts for the 60-day certificate of deposit, he will be late on his payment to the wholesaler. How much will the penalty be if he is late on his payment to the wholesaler? $ How much will the retailer make in total if he opts for the 60-day certificate and has to pay the penalty out of the proceeds of the interest earned on the CD? (Round your answer to the nearest cent.) $ Is it better to take the 45-day…Assume that you have a balance of $4200 on your Discover credit card and that you make no more charges. Assume that Discover charges 25% APR and that each month you make only the minimum payment of 2.2% of the balance. What will the balance be after 10 years? (Enter your answer rounded to the nearest cent.)
- A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. (Assume a 365-day year.) Questions: - How many days are there per period? - What is the effective annual cost of not taking this discount? - The number of compounding period is ___.Harper Corp.'s sales last year were $395,000, and its year-end receivables were $42,500. Harper sells on terms that call for customers to pay 30 days after the purchase, but many delay payment beyond Day 30. On average, how many days late do customers pay? Base your answer on this equation: DSO - Allowed credit period = Average days late, and use a 365-day year when calculating the DSO. O a. 9.74 b. 8.37 Oc8.81 Od. 7.95 Oe. 9.27A firm is offered trade credit terms of 3/15, net 45 days. The firm does not take the discount, and it pays after 67 days. What is the nominal annual cost of not taking the discount? (Assume a 365-day year.) Show your completesolution.
- A company buys on terms of 2/15, net 30 days. It does not take discounts, and it typically pays 35 days after the invoice date. Net purchases amount to P720,000 per year. What is the nominal annual cost of its non-free trade credit? (Assume a 365-day year.) Show your complete solution.Assume that you have a balance of $4500 on your Discover credit card and that you make no more charges. Assume that Discover charges 21% APR and that each month you make only the minimum payment of 2.5% of the balance. a) Find a formula for the balance after t monthly payments. b) What will the balance be after 30 months? c) What will the balance be after 10 years?The Doesn’t Pay Life Insurance Co. is selling a perpetuity contract that promises to pay $10,000 annually forever with the first payment in exactly five years. Considering that Doesn’t Pay has a low rating from Fitch, you would require a 15% return. What is the most that you would be willing to pay for the contract?
- Suppose your Visa credit card charges an APR of 13.5%, compounded monthly and your current statement shows a balance of $758.50.a) If you make no payments and no additional purchases for one year, what will bethe amount owed at the end of that year?b) How much total interest will be paid?c) What is the nominal rate?d) What is the effective annual rate (EAR)?e) Suppose this credit card company requires a minimum monthly payment of $25.Assuming that no additional purchases are made and also assuming that this minimum amount is paid every month, prepare an amortization schedule for the first three months of payments.Hard Rock Paving Company is applying for a loan. It is your job to determine how much they will be able to borrow. They will not be making any payments for the first 15 months. After that, they will make payments of $1,000 per month for four years. There is no interest-free grace period. The first $1,000 payment will be made 15 months after the loan is received. If the interest rate is 13.2% compounded monthly, how much can they expect to borrow?A supplier will give Shark Unibase Company a discount of 2% if an invoice is paid 60 days before its due date. Suppose Shark wants to take advantage of this discount but needs to borrow the money. It plans to pay back the loan in 60 days. What is the highest annual simple interest rate at which Shark Unibase can borrow the money and still save by paying the invoice 60 days before its due date?