period.Q-5: The D.J. Brothers Corporation needs to raise Rs. 500,000 for 1 year to supply working capital to a newstore. Brothers buys from its suppliers on terms of 3/10, net 90, and it currently pays on the 10th day andtakes discounts. However, it could forgo the discounts, pay on the 90th day, and thereby obtain theneeded Rs. 500,000 in the form of costly trade credit. What is the effective annual interest rate of thistrade credit?

Companies give trade discounts to customers to pay early because the companies can use money…

The D.J. Brothers Corporation needs to raise Ks. store. Brothers buys from its suppliers on terms of 3/10, net 90, and it currently pays on the 10th day an takes discounts. However, it could forgo the discounts, pay on the 90th day, and thereby obtain th needed Rs. 500,000 in the form of costly trade credit. What is the effective annual interest rate of th trade credit?

The D.J. Brothers Corporation needs to raise Ks. store. Brothers buys from its suppliers on terms of 3/10, net 90, and it currently pays on the 10th day an takes discounts. However, it could forgo the discounts, pay on the 90th day, and thereby obtain th needed Rs. 500,000 in the form of costly trade credit. What is the effective annual interest rate of th trade credit?

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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Compañía CSB, S.A., requires short-term financing and requests a loan from Banco del Comercio, and proposes to guarantee it with inventories, for an amount of US$ 500,000.00. The bank accepts the proposal, with the following credit conditions: Credit conditions: a) Term 1 year b) He receives the inventories for a value of 90% of the value c) Charges you a 3% disbursement fee d) the interest rate is 20% per year e) The costs related to the mobilization of inventories are borne by Meyer Co., which are 3% of 100% of the value of the inventories. All costs involved must be covered in advance and will be deducted at the time of disbursement. It is requested: 1.- Determine the amount of the credit 2.- Calculate each cost involved in the transaction 3.- Determine the total amount of costs 4.- Determine the net amount you will receive after deducting the total costs 5.- Calculate the real rate of financial cost (TEA)
es Little Kimi Clothiers can borrow from its bank at 20 percent to take a cash discount. The terms of the cash discount are 3/25 net 85. a. Compute the cost of not taking the cash discount. (Use 365 days in a year. Do not round the intermediate calculations. Round the final answer to 2 decimal places.) Cost of not taking a cash discount b. Should the firm borrow the funds? % 00 Yes O No
Red Lizard Construction just borrowed $53,600.00. The terms of the loan require the company to make equal monthly payments forever. The first monthly payment is due in 1 month. If the regular monthly loan payment is $600.00, then what is the EAR of the loan? A rate less than 10.44% or a rate greater than 14.72% A rate equal to or greater than 12.43% but less than 13.86% A rate equal to or greater than 10.44% but less than 11.06% A rate equal to or greater than 11.06% but less than 12.43% A rate equal to or greater than 13.86% but less than 14.72% 100
The Second National Bank of Fullerton advertises an APR of 15%, but it indicates in the “small print” that compounding occurs on a monthly basis for personal loans with no collateral required. This is a multi-part question. Once an answer is submitted, you will be unable to return to this part. Determine the APY you would pay using an equation. The APY paid would be % per year.
Your company is considering three options for financing its short term operations i. Borrow Tk.25 million from Shuktara Bank at 15 percent interest rate and a 20 percent compensating balance requirement signing a 60 day promissory note. ii. Borrow Tk.25 million from Chandramukhi Bank at 15 percent discount interest. i. Forego discount on a trade credit on terms 3/10, net 50. Strictly based on effective cost, which option would you select and why?
6. A phone company offers an Android phone for P47,000. The sales tax is 12% of the purchase price. What is the total cost, including sales tax? If you make a down payment of 15% of the total cost, what is the down payment? Assuming you finance the remaining cost at an annual interest rate of 7.5% for six months, what is the monthly payment?
please quickluy , thanks 27. Caterpillar purchased merchandise from Alpha echnologies as follows: Invoice date: March 12th Invoice Amount: $4,000 Terms: 2/10, n/30 If we assume an annual interest rage of 6% and a 360-day year. And Caterpillar has to borrow money for the remaining 20 days of the credit period. How much are the savings from taking the discount? A.19.6 B.66.93 C.13.07 D.6.67
Explain the Formula Otherwise I will dislike.. 1) A credit card company charges an interest rate of 1.13% per quarter on the unpaid balance of all accounts. What would be the effective rate of interest per year being charged by the company? The annual effective rate would be 4.52% The annual effective rate would be 4.60% The annual effective rate would be 4.13% The annual effective rate would be 1.13%
-Due to the peso devaluation, a car of costing P150,000 is to be purchased through a finance company instead of paying cash. If the buyer is required to pay P40,000 as down payment and P4,000 each month for four years, what is the effective interest rate on the diminishing balance?
(Related to Checkpoint 18.2) (Evaluating trade credit discounts) If a firm buys on trade credit terms of 5/15, net 90 and decides to forgo the trade credit discount and pay on the net day, what is the annualized cost of forgoing the discount (assume a 365-day year)? The annualized cost of the trade credit terms of 5/15, net 90 is %. (Round to two decimal places.)
The Patel Company has several financial issues to solve. As the company’s Financial Analyst you have been asked to answer the following 2 questions: Their bank will lend them $100,000 for 90 days at a cost of $1,200 interest. What is the company’s effective annual rate? A major supplier has granted credit terms of 1/10 N120. Assuming the company can borrow any amount of money at the rate you have calculated above (in part 1), should the company take the discount? (Your answer must be supported with a calculation of the cost of not taking the discount – using either simple or effective annual rate)
An Scottish company is offering the terms of 2/10 net 30. For a purchase of $3,000, answer the following questions: a) When is the payment due? b) How much will the company pay if it pays in 30 days? c) How much will the company pay if it pays in 10 days?

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