Answered: Calculate the cost to Energy of not…

Business

Finance

Calculate the cost to Energy of not accepting the discount

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Red Bull Limited normal credit terms to Energy Limited is 60 days but is prepared to allow an 8% rebate if it pays the account within 30 days. Calculate the cost to Energy of not accepting the discount.

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A company is offred trade credit terms of 3/15, net 30 days. If the firm does not take the discount, and it pays after 50 days. Compute for the effective annual cost of not taking this discount. (Assume a 365 day) a.30.00% b.32.25% c.37.39% d.45.50% e.44.30%
Regis Clothiers can borrow from its bank at 18 percent to take a cash discount. The terms of the cash discount are 3/22, net 40. a. Compute the cost of not taking the cash discount. Note: Use a 360-day year. Do not round intermediate calculations. Input your final answer as a percent rounded to 2 decimal places. Cost of not taking a cash discount
A store will give you a 1.75% discount on the cost of your purchase if you pay cash today. Otherwise, you will be billed the full price with payment due in 1 month. What is the implicit borrowing rate being paid by customers who choose to defer payment for the month? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal points. Effective Annual Rate: ___%
Cash Crunched Company (CCC) purchases computer parts from its suppliers 2/5, net 60. However, CCC routinely stretches accounts payable 10 days beyond the due date. How much does the account stretching reduce the cost of not taking the trade discount? Select one: a. 2.04% b. 2.34% c. 12.01% d. 14.35% e. None of the above.
A credit term of 3/10 net 60 means Discount of 0.3% if paid immediately else payment is effected after 60 days Discount of 10% if paid within 3 days else payment is effected after 60 days Discount of 3% if paid within 10 days else payment is effected after 60 days 10% of the dues paid within 3 days and balance in 60 days
3. If you charge $1075 on your credit card and the minimum payment is $96. You only make the minimum payment. a. Does the minimum payment fit in your budget. b. If the APR on the credit card is 18% and there is 31 days in the billing period, how much interest will you owe on the purchase?
Chapter 13, Question 7. Attached is a similar question with answers. Please answer the same two parts for the new question
Which is correct ?
NEKO Inc. is given terms of 2/10, net 45 by its suppliers. If NEKO Inc. forgoes the cash discount offered and pays the suppliers 5 days after the due date, what is the annual interest rate cost (Use 360-day year)?
A store will give you a 2.25% discount on the cost of your purchase if you pay cash today. Otherwise, you will be billed the full price with payment due in 1 month. What is the implicit borrowing rate being paid by customers who choose to defer payment for the month?
a. Argo sells maintenance services to various private jet operators. For these, it demands payment within 15 days. Argo is considering changing this policy to 1.1%/5, net 15. What is the implicit effective annual rate in this payment policy? Important: Show formulas used to calculate A B a) Effective Annual Rate (EAR) 2 3 Notional purchase 4 Discount (%) 5 Days difference 7 Discount ($) 8 Rate (%) 9 Days difference in 1 year 10 11 EAR
4. The total current amount due to a purchase made by using credit card is P54,245.50, Based on the agreement the minimum required payment is 8.5% of the total amount due, If the client pays only the minimum requlred payment, a charge 2.5% of the remaining balance will be carried on to the next bill. If there are no purchases made for the next two manths and a charge of 2.5% is added every billing period, what is the required monthly bill for the next months? TIME/MONTH TOTAL AMOUNT DUE FOR MINIMUM REQUIRED THE MONTH PAYMENT FOR THE MONTH

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