You place an order for 470 units of inventory at a unit price of $175. The supplier offers terms of 2/15, net 90. a-1. How long do you have to pay before the account is overdue? a-2. If you take the full period, how much should you remit? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b-1. What is the discount being offered?
You place an order for 470 units of inventory at a unit price of $175. The supplier offers terms of 2/15, net 90. a-1. How long do you have to pay before the account is overdue? a-2. If you take the full period, how much should you remit? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b-1. What is the discount being offered?
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
![**Educational Website Content**
---
**Invoice Payment Terms and Discount Calculations**
*Scenario:*
You place an order for 470 units of inventory at a unit price of $175. The supplier offers terms of 2/15, net 90.
**Questions:**
**a-1. Days Until Overdue:**
- How long do you have to pay before the account is overdue?
**a-2. Full Period Remittance:**
- If you take the full period, how much should you remit? *(Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)*
**b-1. Discount Offered:**
- What is the discount being offered?
**b-2. Discount Payment Period:**
- How quickly must you pay to get the discount?
**b-3. Discounted Remittance:**
- If you do take the discount, how much should you remit? *(Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)*
**c-1. Implicit Interest:**
- If you don’t take the discount, how much interest are you paying implicitly? *(Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)*
**c-2. Days' Credit:**
- How many days’ credit are you receiving? *(Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)*
**Data Entry:**
- **a-1. Days until overdue:** [ ] days
- **a-2. Remittance:** [ ]
- **b-1. Discount offered:** [ ] %
- **b-2. Number of days:** [ ] days
- **b-3. Remittance:** [ ]
- **c-1. Implicit interest:** [ ]
- **c-2. Days' credit:** [ ] days
*Note for Students:*
Ensure to calculate with accuracy and follow the instructions regarding rounding numbers. This practice will help in understanding the cost of trade credit and making informed financial decisions.
---
*Use this content to better grasp invoice terms and the impact of payment timing on total costs.*](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff00761e5-6ea2-4b64-9c87-d0591240e351%2F4ff77725-6569-48d6-b7e3-4e331be41354%2Fyyy0sa_processed.png&w=3840&q=75)
Transcribed Image Text:**Educational Website Content**
---
**Invoice Payment Terms and Discount Calculations**
*Scenario:*
You place an order for 470 units of inventory at a unit price of $175. The supplier offers terms of 2/15, net 90.
**Questions:**
**a-1. Days Until Overdue:**
- How long do you have to pay before the account is overdue?
**a-2. Full Period Remittance:**
- If you take the full period, how much should you remit? *(Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)*
**b-1. Discount Offered:**
- What is the discount being offered?
**b-2. Discount Payment Period:**
- How quickly must you pay to get the discount?
**b-3. Discounted Remittance:**
- If you do take the discount, how much should you remit? *(Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)*
**c-1. Implicit Interest:**
- If you don’t take the discount, how much interest are you paying implicitly? *(Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)*
**c-2. Days' Credit:**
- How many days’ credit are you receiving? *(Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)*
**Data Entry:**
- **a-1. Days until overdue:** [ ] days
- **a-2. Remittance:** [ ]
- **b-1. Discount offered:** [ ] %
- **b-2. Number of days:** [ ] days
- **b-3. Remittance:** [ ]
- **c-1. Implicit interest:** [ ]
- **c-2. Days' credit:** [ ] days
*Note for Students:*
Ensure to calculate with accuracy and follow the instructions regarding rounding numbers. This practice will help in understanding the cost of trade credit and making informed financial decisions.
---
*Use this content to better grasp invoice terms and the impact of payment timing on total costs.*
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Transcribed Image Text:### Payment Terms Overview
This table outlines various parameters associated with payment terms:
- **a-1. Days until overdue:**
- Value: 90 days
- Description: The number of days remaining before the payment is considered overdue.
- **a-2. Remittance:**
- Value: $82,250
- Description: The amount to be paid.
- **b-1. Discount offered:**
- Value: 2%
- Description: The percentage discount available if the payment is made within a specific timeframe.
- **b-2. Number of days:**
- Value: N/A (to be filled)
- Description: The number of days within which the discount can be applied.
- **b-3. Remittance:**
- Value: N/A (to be filled)
- Description: Adjusted payment amount after applying the discount.
- **c-1. Implicit interest:**
- Value: N/A (to be filled)
- Description: The implicit interest rate based on the discount terms and payment period.
- **c-2. Days' credit:**
- Value: N/A (to be filled)
- Description: The credit period offered minus the discount period.
This table is useful for understanding and calculating the financial implications of payment terms and discounts in transactional agreements.
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