Annual credit sales of Nadak Co. total $680 million. The firm gives a 2% cash discount for payment within 10 days of the Invoice date: 90% of Nadak's accounts receivable are paid within the discount period. Required: a. What is the total amount of cash discounts allowed in a year? (Enter your answer in millions rounded to 2 decimal places.) Total amount b. Calculate the approximate annual rate of return on Investment that Nadak Co's cash discount terms represent to customers who take the discount. (Assume a credit period of 30 days and 360-days year). (Round intermediate calculations to nearest whole percentage.)

Annual credit sales of Nadak Co. total $680 million. The firm gives a 2% cash discount for payment within 10 days of the Invoice date: 90% of Nadak's accounts receivable are paid within the discount period. Required: a. What is the total amount of cash discounts allowed in a year? (Enter your answer in millions rounded to 2 decimal places.) Total amount b. Calculate the approximate annual rate of return on Investment that Nadak Co's cash discount terms represent to customers who take the discount. (Assume a credit period of 30 days and 360-days year). (Round intermediate calculations to nearest whole percentage.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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