A firm with sales of $10,000,000 has inventory of $800,000. The firm has no cash sales (all sales are oncredit and are collected within 39 days). You are willing to sell inventory to the firm on credit providedthat you will be paid within 90 days. Should you sell to this firm on credit? Assume there are 365 days ina year. (This question is more subtle than it appears. Think through all the given information.) Round youranswer to the nearest whole number.On average, it will take yousell to the firm on credit.days to receive the payments, therefore, you -Select-

The operating cycle of a firm is time period from the purchase of raw materials till the receipt of…

Answered: On average, it will take you sell to…

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On average, it will take you sell to the firm on credit. days to receive the payments, therefore, you -Select-

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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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

A firm with sales of $10,000,000 has inventory of $800,000. The firm has no cash sales (all sales are on
credit and are collected within 39 days). You are willing to sell inventory to the firm on credit provided
that you will be paid within 90 days. Should you sell to this firm on credit? Assume there are 365 days in
a year. (This question is more subtle than it appears. Think through all the given information.) Round your
answer to the nearest whole number.
On average, it will take you
sell to the firm on credit.
days to receive the payments, therefore, you -Select-

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You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.) Amount Financed Number of Payments Monthly Payments Rebate Payment Made Fraction Finance Charge Rebate $4,700 36 $167.33 29 15/666 X $ 85.76 Loan Payoff x $785 89
You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.) AmountFinanced Number ofPayments MonthlyPayment PaymentsMade RebateFraction FinanceChargeRebate LoanPayoff $1,700 18 $123.89 12
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Which do you prefer: a bank account that pays 5.0% per year (EAR) for three years or a. An account that pays 2.5% every six months for three years? b. An account that pays 7.5% every 18 months for three years? c. An account that pays 0.50% per month for three years? (Note: Compare your current bank EAR with each of the three alternative accounts. Be careful not to round any intermediate steps less than six decimal places.) If you deposit $1 into a bank account that pays 5.0% per year for three years: The amount you will receive after three years is $ (Round to five decimal places.)
You are the loan department supervisor for a bank. This installment loan is being paid off early, and it is your task to calculate the rebate fraction, the finance charge rebate (in $), and the payoff for the loan (in $). (Round dollars to the nearest cent.) AmountFinanced Number ofPayments MonthlyPayment PaymentsMade RebateFraction FinanceChargeRebate LoanPayoff $1,900 18 $126.89 13 $ $
You work in a company. You are offered the choice of two payments streams. A. $250 paid now. B. $150 paid now, $50 paid three months from now, and $150 paid ten months from now. If you want both of them to be equal, What should the intrest rate be?
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