TERM FINANCING II. Directions: Solve the following 1. Princess trading ordinarily purchases raw materials amounting to Php 200,000 with the terms 2/15, net 30, Princess operates at 360 days a year. Required: 1. Compute the annual nominal cost of trade credit or the cost failing to take the cash discount. 2. Compute the effective annual cost or rate of the trade credit of not taking the cash discount. 3. Will it be beneficial for PRINCESS TRADING to pay within 15 days from the purchase assuming banks are charging 15 % interest on loan.
TERM FINANCING II. Directions: Solve the following 1. Princess trading ordinarily purchases raw materials amounting to Php 200,000 with the terms 2/15, net 30, Princess operates at 360 days a year. Required: 1. Compute the annual nominal cost of trade credit or the cost failing to take the cash discount. 2. Compute the effective annual cost or rate of the trade credit of not taking the cash discount. 3. Will it be beneficial for PRINCESS TRADING to pay within 15 days from the purchase assuming banks are charging 15 % interest on loan.
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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Topic: short term financing
Directions: solve the following (please answer subpart 1-3)
Transcribed Image Text:II.
T OPIC: SHORT TERM FINANCING
III.
Directions: Solve the following
1. Princess trading ordinarily purchases raw materials amounting to Php 200,000 with the terms 2/15,
net 30, Princess operates at 360 days a year.
Required:
1. Compute the annual nominal cost of trade credit or the cost failing to take the cash discount.
2. Compute the effective annual cost or rate of the trade credit of not taking the cash discount.
3. Will it be beneficial for PRINCESS TRADING to pay within 15 days from the purchase assuming
banks are charging 15 % interest on loan.
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