Provide a and b If your firm buys $1,000 worth of supplieson credit with terms 3/15, n60, and paysthe bill on the 60th day after thepurchase:a. What is the approximate, or "nominal,"cost of trade credit as an annual rate?b. What is the exact cost of trade credit asan annual rate?

1. Understanding the terms: - The firm buys $1,000 worth of supplies on credit. - The terms are…

Answered: If your firm buys $1,000 worth of…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 8P

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If a firm buys on terms of 3/15, net 45, but actually pays on the 20th day and still takes the discount, what is the nominal cost of its nonfree trade credit? Does it receive more or less credit than it would if it paid within 15 days?
Suppose your credit card issuer states that it charges a 17.00% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding. What is the effective annual rate? a.16.08% b.16.88% c.15.27% d.17.72% e.18.39%
Suppose your credit card issuer states that it charges a 24.00% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding. What is the effective annual rate? O a. 26.29% b. 31.12% O c. 29.51% d. 26.82% e. 21.19%
10. Your company has been offered credit terms of 4/30, net 90 days. What will be the nominal annual percentage cost of its non-free trade credit if it pays 140 days after the purchase? (Assume a 365-day year.) а. 13.13% b. 11.89% с. 13.83% d. 17.01% е. 15.76%
Required: a. A firm currently offers terms of sale of 3/25, net 50. Calculate the effective annual rate. a-1. Calculate the effective annual rate if the terms are changed to 4/25, net 50. a-2. What effect does an increase in the discount rate have on the implicit interest rate charged to customers that pass up the discount? b-1. Calculate the effective annual rate if the terms are changed to 3/35, net 50. b-2. What effect does a decrease in the extra days of credit have on the implicit interest rate charged to customers that pass up the discount? c-1. Calculate the effective annual rate if the terms are changed to 3/25, net 40. c-2. Is there any difference between the implicit interest rate for terms of 3/35, net 50 and 3/25, net 40?
14. Trade credit terms of 2/10, net 90 are available. Calculate the cost of trade credit when payment is made on the net due date using the EAR (also known as APY). Use a 360 day year.
What is the apr? Please solve this question general Accounting question
Answer? ? Financial accounting question
Please give answer general accounting question
What is the internal rate of return on a $3,000 loan to be repaid as $3,500 twoyears from now?
Suppose your Visa credit card charges an APR of 13.5%, compounded monthly and your current statement shows a balance of $758.50.a) If you make no payments and no additional purchases for one year, what will bethe amount owed at the end of that year?b) How much total interest will be paid?c) What is the nominal rate?d) What is the effective annual rate (EAR)?e) Suppose this credit card company requires a minimum monthly payment of $25.Assuming that no additional purchases are made and also assuming that this minimum amount is paid every month, prepare an amortization schedule for the first three months of payments.
Answer? ? Financial accounting question

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If your firm buys $1,000 worth of supplies on credit with terms 3/15, n60, and pays the bill on the 60th day after the purchase: a. What is the approximate, or "nominal," cost of trade credit as an annual rate? b. What is the exact cost of trade credit as an annual rate?