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Sexton Corporation has projected the following sales for the coming year: 01 Sales $ 720 Sales in the year following this one are projected to be 10 percent greater in each quarter. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 25 percent of projected sales for the next quarter. Assume that the company pays immediately. $ 840 $ 960 04 $ 930

Sexton Corporation has projected the following sales for the coming year: 01 Sales $ 720 Sales in the year following this one are projected to be 10 percent greater in each quarter. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 25 percent of projected sales for the next quarter. Assume that the company pays immediately. $ 840 $ 960 04 $ 930

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sexton Corporation has projected the following sales for the coming year: Q4 $ 930 Sales 01 $ 720 Sales in the year following this one are projected to be 10 percent greater in each quarter. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 25 percent of projected sales for the next quarter. Assume that the company pays immediately. a. What is the payables period in this case? Note: Do not round Intermediate calculations and round your answer to the nearest whole number, e.g., 32. Payables period 02 $ 840 Answer is complete and correct. Payment of accounts What are the payments to suppliers each quarter? Note: Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Payment of accounts Q3 $ 960 Payment of accounts 0 $ S Q1 210.00 b. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 25 percent of projected sales for the next quarter. Assume a 90-day payables period. Note: Do not round Intermediate calculations and round your answers to 2 decimal places e.g., 32.16. Q1 180.00 Answer is complete and correct. Q2 240.00 s Q3 232.50 $ Q1 $ 190.00 Answer is complete and correct. Q3 $ Q2 $ 210.00 $ c. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 25 percent of projected sales for the next quarter. Assume a 60-day payables period. Note: Do not round Intermediate calculations and round your answers to 2 decimal places e.g., 32.16. 240.00 $ Answer is not complete. Q3 Q2 220.00 $ Q4 237.50 Q4 198.00 232.50 Q4
Transcribed Image Text:Sexton Corporation has projected the following sales for the coming year: Q4 $ 930 Sales 01 $ 720 Sales in the year following this one are projected to be 10 percent greater in each quarter. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 25 percent of projected sales for the next quarter. Assume that the company pays immediately. a. What is the payables period in this case? Note: Do not round Intermediate calculations and round your answer to the nearest whole number, e.g., 32. Payables period 02 $ 840 Answer is complete and correct. Payment of accounts What are the payments to suppliers each quarter? Note: Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. Payment of accounts Q3 $ 960 Payment of accounts 0 $ S Q1 210.00 b. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 25 percent of projected sales for the next quarter. Assume a 90-day payables period. Note: Do not round Intermediate calculations and round your answers to 2 decimal places e.g., 32.16. Q1 180.00 Answer is complete and correct. Q2 240.00 s Q3 232.50 $ Q1 $ 190.00 Answer is complete and correct. Q3 $ Q2 $ 210.00 $ c. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 25 percent of projected sales for the next quarter. Assume a 60-day payables period. Note: Do not round Intermediate calculations and round your answers to 2 decimal places e.g., 32.16. 240.00 $ Answer is not complete. Q3 Q2 220.00 $ Q4 237.50 Q4 198.00 232.50 Q4
In exchange for a $400 million fixed commitment line of credit, your firm has agreed to do the following: 1. Pay 1.84 percent per quarter on any funds actually borrowed. 2. Maintain a 2 percent compensating balance on any funds actually borrowed. 3. Pay an up-front commitment fee of 29 percent of the amount of the line. Based on this information, answer the following: a. Ignoring the commitment fee, what is the effective annual interest rate on this line of credit? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Suppose your firm immediately uses $214 million of the line and pays it off in one year. What is the effective annual interest rate on this $214 million loan? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 7.72 % 7.74 X % a. Effective annual rate b. Effective annual rate
Transcribed Image Text:In exchange for a $400 million fixed commitment line of credit, your firm has agreed to do the following: 1. Pay 1.84 percent per quarter on any funds actually borrowed. 2. Maintain a 2 percent compensating balance on any funds actually borrowed. 3. Pay an up-front commitment fee of 29 percent of the amount of the line. Based on this information, answer the following: a. Ignoring the commitment fee, what is the effective annual interest rate on this line of credit? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Suppose your firm immediately uses $214 million of the line and pays it off in one year. What is the effective annual interest rate on this $214 million loan? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 7.72 % 7.74 X % a. Effective annual rate b. Effective annual rate
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