Fill in the blank with the correct answer Green Moose Industries buys on terms of2.5/15, net 45 from its chief supplier. SupposeGreen Moose does not take advantage of thediscount and the average. On average, GreenMoose will pay its supplier on the 50th dayafter the sale. As a result, Green Moose candecrease its nominal cost of trade credit byby paying late.

Step 1: Define Cash discountCash discount indicates a form of reward provided to the buyers if the…

Answered: Green Moose Industries buys on terms of…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter23: Other Topics In Working Capital Management

Section: Chapter Questions

Problem 8MC

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Cullumber Corp. sells its goods with terms of 3/10 EOM, net 45. What is the implicit cost of the trade credit? (Do not round itermediate calculations. Use 365 days for calculation. Round answer to 2 decimal places, e.g. 12.25%.) The implicit cost of the trade credit is My answer was wrong ... can someone help me with this please?
What is the effective annual percentage cost of its non-free trade credit?
Roton Inc. purchases merchandise on terms of 2/15, net 40, and its gross purchases (i.e., purchases before taking off the discount) are $525,000 per year. What is the maximum dollar amount of costly trade credit the firm could get, assuming it abides by the supplier's credit terms? (Assume a 365-day year.) Do not round intermediate calculations. Select one:
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: Tasty Tuna Corporation buys on terms of 4/10, net 45 from its chief supplier. A. If Tasty Tuna receives an invoice for $856.75, what would be the true price of this invoice? (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) $822.48 $575.74 $699.11 $616.86 B. The nominal annual cost of the trade credit extended by the supplier is , assuming a 365-day year. (Note: Round all intermediate calculations to four decimal places, and your final answer to two decimal places.) C. Suppose Tasty Tuna does not take advantage of the discount and then chooses to pay its supplier late—so that on average, Tasty Tuna will pay its supplier on the 50th day after the sale. As a result,…
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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Assume the credit terms offered to your firm by your suppliers are 2/15, net 30 . Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30 . (Hint: Use a 365 -day year.)
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