esLittle Kimi Clothiers can borrow from its bank at 20 percent to take a cash discount. The terms of the cash discount are 3/25 net 85.a. Compute the cost of not taking the cash discount. (Use 365 days in a year. Do not round the intermediate calculations. Round thefinal answer to 2 decimal places.)Cost of not taking a cash discountb. Should the firm borrow the funds?%00YesO No

a:Cost of not taking cash discount = [(Discount % / 100% - Discount %) * (365 / (Final due date -…

Answered: es Little Kimi Clothiers can borrow…

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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Simmons Corporation can borrow from its bank at 21 percent to take a cash discount. The terms of the cash discount are 2.5/14, net 50. 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.
Your company is considering three options for financing its short term operations i. Borrow Tk.25 million from Shuktara Bank at 15 percent interest rate and a 20 percent compensating balance requirement signing a 60 day promissory note. ii. Borrow Tk.25 million from Chandramukhi Bank at 15 percent discount interest. i. Forego discount on a trade credit on terms 3/10, net 50. Strictly based on effective cost, which option would you select and why?
f a firm buys under terms of 3/15, net 50, but actually pays on the 20th day and still takes the discount, what is the nominal cost of its nonfree trade credit? Assume a 365-day year. Do not round intermediate calculations. Round your answer to two decimal places. % Does it receive more or less credit than it would if it paid within 15 days? I. Paying after the discount period, but still taking the discount gives the firm less credit than it would receive if it paid within 15 days. II. Paying before the discount period and taking the discount gives the firm more credit than it would receive if it paid within 15 days. III. Paying after the discount period, but still taking the discount gives the firm more credit than it would receive if it paid within 15 days.
vi. Subject Finance
A firm offers terms of 1.2/10, net 60. a. What effective annual interest rate does the firm earn when a customer does not take the discount? (Use 365 days a year. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What effective annual interest rate does the firm earn if the terms are changed to 2.2/10, net 60, and the customer does not take the discount? (Use 365 days a year. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What effective annual interest rate does the firm earn if the terms are changed to 1.2/10, net 75, and the customer does not take the discount? (Use 365 days a year. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) d. What effective annual interest rate does the firm earn if the terms are changed to 1.2/15, net 60, and the customer does not…
A guy is wondering which account he should invest in Account A- earns an APR of 4% of compunded monthly Account B- intrest is compunded daily, and the effective annual rate is 4%(APR is unknown) In Account B the 4% is an effective annual rate does this mean Account B is better if money is left in there for one year? If the money is left in there for 1 or more year does it make a diffrence?
Compute the cost of not taking the following cash discounts. Note: Use a 360-day year. Do not round intermediate calculations. Input your final answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Cost of Lost Discount 22.11% 18.71% 40.51% 157.41% a. 2/11, net 50 b. 2/17, net 50 c. 4/15, net 50 d. 4/19, net 155
please quickluy , thanks 27. Caterpillar purchased merchandise from Alpha echnologies as follows: Invoice date: March 12th Invoice Amount: $4,000 Terms: 2/10, n/30 If we assume an annual interest rage of 6% and a 360-day year. And Caterpillar has to borrow money for the remaining 20 days of the credit period. How much are the savings from taking the discount? A.19.6 B.66.93 C.13.07 D.6.67
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I keep getting EAR wrong

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