Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Free Spirit Industries Inc. buys most of its raw materials from a single supplier. This supplier sells to Free Spirit on terms of 4/15, net 60. The cost per period of the trade credit extended to Free Spirit, rounded to two decimal places, is Free Spirit's trade credit has a nominal annual cost of decimal places, and your final answer to two decimal places.) The effective annual rate (EAR) of the supplier's trade credit is assuming a 365-day year. (Note: Round all intermediate calculations to four If Free Spirit Industries Inc.'s supplier shortens its discount period to five days, this will the cost of the trade credit.

Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Free Spirit Industries Inc. buys most of its raw materials from a single supplier. This supplier sells to Free Spirit on terms of 4/15, net 60. The cost per period of the trade credit extended to Free Spirit, rounded to two decimal places, is Free Spirit's trade credit has a nominal annual cost of decimal places, and your final answer to two decimal places.) The effective annual rate (EAR) of the supplier's trade credit is assuming a 365-day year. (Note: Round all intermediate calculations to four If Free Spirit Industries Inc.'s supplier shortens its discount period to five days, this will the cost of the trade credit.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter18: The Management Of Accounts Receivable And Inventories

Section: Chapter Questions

Problem 7P

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Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which will affect the actual cost of asset being sold for the buyer and the seller. Consider this case: Green Moose Industries buys most of its raw materials from a single supplier. This supplier sells to Green Moose on terms of 1/10, net 30. The cost per period of the trade credit extended to Green Moose is ________(1.23%, 0.89%, 1.01%, 1.05%) (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.). Green Moose’s trade credit has a nominal annual cost of _______ (22.85%, 19.17%, 16.59%, 18.43%) , assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) If Green Moose Industries’s supplier shortens its discount period to five days, this will _______ (Increase, Decrease) the cost of the trade credit.
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Fill in the blank with the correct answer
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