BA collects its receivables after 25 days on the average, so that they amount to P75,000. A proposal has been made to shorten the credit term to 20 days or by 5 days. Said proposal will reduce receivables (or reduce cash requirement) by P15,000, Assuming 15% cost of money, how much is the expected savings in financing charges?
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CBA collects its receivables after 25 days on the average, so that they amount to P75,000. A proposal has been made to shorten the credit term to 20 days or by 5 days. Said proposal will reduce receivables (or reduce cash requirement) by P15,000, Assuming 15% cost of money, how much is the expected savings in financing charges?
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- A company has accounts payable of P5,000,000 with terms of 2% discount within 15 days, net 30 days (2/15, net 30). It can borrow funds from a bank at an annual rate of 12%, or it can wait until the 30th day when it will receive revenues to cover the payment. If it borrows funds on the last day of the discount period in order to obtain the discount, its total cost will beUtah Inc. would need cash of P5,000,000 for a period of 3 months from its bank. The latter offered 12% interest but it would be charged direct origination costs to be deducted in advanced in the amount of P200,000. What would the simple annual effective cost of this bank loan?angel co. has P500,000 in receivable that carries a 30-day credit term, 2% factor’s fee, 5% holdback reserve, and an interest of 12% per annum on advances. Use 360 days. What is the effective annual financing cost of factoring?
- A company can issue a 90-day $5 million commercial paper at a rate of 6.55%. It can reduce the rate to 6.35% if it is backed by a standby letter of credit (SBLC). A bank is willing to issue the SBLC for a fee of 10 basis points. a) Should the company obtain an SBLC? Explain why or why not? b) Explain the formula - Expected loss = EAD × PD × LGDFind the annual financing cost of a 45 day revolving credit agreement with a 0.5% commitment fee. Assume you borrow $377,863m at 5.96%. You can borrow up to $500,000. b.Find the annual financing cost (AFC) or a 30 day line of credit where the bank requires a 10% compensating balance requirement. Assume you borrow $211,895m at 5.39% and you have $20,000 in the bank.HAPPY Company makes credit sales of P1,800,000 annually. The average age of accounts receivable is 30 days. Management consider shortening credit terms to 20 days. Cost of money is 12%. How much will the company save from financing charges? Use 360-day year MY ANSWER IS 6,000 AND 12,000. WHAT IS THE CORRECT ANSWER?
- You owe 25,000 on a credit card that changes 1.5% interest each month. You can pay 2,500 each month with no new charges. What is the equilibrium value? What does the equilibrium value mean in terms of the credit card?A loan of P30,000 is to be repaid monthly for 5 years that will start at the end of 4 years. If interest is 12% converted monthly, how much is the monthly payment? (Draw the cash flow diagram; indicate the artificial payments and the actual payments.)A firm has daily cash receipts of P100,000. A bank has offered to reduce the collection time on the firm’s deposits by three days for a monthly fee of P500. If money market rates are expected to average 5% during the year, the net annual benefit (loss) from having this service is
- Van Buren Resources Inc. is considering borrowing $90,000 for 175 days from its bank. Van Buren will pay $3,000 of interest at maturity, and it will repay the $90,000 of principal at maturity. Assume that there are 365 days per year. Calculate the loan’s annual financing cost. Round your answer to two decimal places. % Calculate the loan’s annual percentage rate. Round your answer to two decimal places. % What is the reason for the difference in your answers to Parts a and b? The does not consider compounding effects.A local bank is advertising that it pays depositors 6% compounded monthly, yielding an effective annual rate of 6.168%. If Ghc2,000 is placed in savings now and no withdrawals are made, how much interest will be earned in one year? Abc Investment Ltd., plans to borrow Ghc100,000 for a 90-day period from Lloyds Finance Company. Abc investment would repay the principal amount plus Ghc5,000 interest at maturity. Determine and calculate the Annual Percentage Rate of the credit to Abc Company Ltd. Ait Limited has annual credit sales of Ghc5 million and cost of sales of GHC1.8 million. The company’s current assets consist of inventory and trade receivables. Current liabilities consist of accounts payables and an overdraft facility with an average interest rate of 10% per annum. The company gives 60 days credit to its customers and is allowed an average of 30 days credit by trade suppliers. The company has an operating cycle of 90 days. Other relevant information: Current ratio of Ait…A local bank is advertising that it pays depositors 6% compounded monthly, yielding an effective annual rate of 6.168%. If Ghc2,000 is placed in savings now and no withdrawals are made, how much interest will be earned in one year? Abc Investment Ltd., plans to borrow Ghc100,000 for a 90-day period from Lloyds Finance Company. Abc investment would repay the principal amount plus Ghc5,000 interest at maturity. Determine and calculate the Annual Percentage Rate of the credit to Abc Company Ltd. Belinda Limited has annual credit sales of Ghc5 million and cost of sales of GHC1.8 million. The company’s current assets consist of inventory and trade receivables. Current liabilities consist of accounts payables and an overdraft facility with an average interest rate of 10% per annum. The company gives 60 days credit to its customers and is allowed an average of 30 days credit by trade suppliers. The company has an operating cycle of 90 days. Other relevant information: Current ratio of…