What is the nominal annual percentate cost of the non-free trade credit if it pays within 120 days of purchase

Q: What are the interest cost and the total amount due on a six-month loan of $2,100 at 13.5 percent…

A: Simple annual interest cost is the net amount of interest that is being charged on the principal…

Q: 1.81. A loan of $10,000 is to be financed over a period of 24 months. The agency quotes a nominal…

A: Monthly payment refers to the performa of the payment that is to be made on monthly basis…

Q: Assume the credit terms offered to your firm by your suppliers are 2​/20​, net 40. Calculate the…

A: Discount rate (r) = 0.02 Discount days (D) = 20 Credit term (C) = 40   Cost of trade credit = ?

Q: Kumi Ltd permits its customers to pay with a credit card or to receive a percentage discount ? for…

A: Given:

Q: delta corporation obtained a $45, 000 loan at a rate of prime +1.15% on July 18. Fixed payments of…

A: The objective of the question is to calculate the outstanding loan balance of Delta Corporation…

Q: Cray Computing needs a 5-month loan for $300,000. Its bank quotes a simple interest rate of 15% on…

A: Therefore, the estimated APR for the loan, assuming monthly compounding, is approximately…

Q: rade credit terms of 2/10, net 90 are available. Calculate the cost of trade credit when payment is…

A: The cost of trade credit is the cost that has been faced by the supplier to issue the goods on…

Q: Royal Bank charges administration fees of 2.9% of the loan amount per annum. Target Corporation has…

A: Here,Administration Fees (f) is 2.9%Negotiated Interest Rate (BR+m) is 10.5%Compensating Balance (b)…

Q: Safewell Co obtains a discount loan at a 12 percent interest rate.  Safewell borrows $100,000 for…

A: Effective interest rate if the amount of interest rate which is charged on the principal amount…

Q: Cheap Money Bank offers your firm a discount interest loan with an interest rate of 9.85 percent for…

A: EAR The interest rate paid by an investor on an investment or loan is called the effective interest…

Q: A $16000 loan is to repaid by monthly payments of $340, the first payment is due in one year's time.…

A: Repayment of loan is made in fixed instalments for during the loan period which include part of…

Q: A leasing contract calls for an immediate payment of $109,000 and nine subsequent $109,000…

A: Compound = Semiannually = 2Payment = p = $109,000Time = t = 10Discount Rate = r = 14 / 2 = 7%

Q: Cray Computing needs a 8-month loan for $300,000. Its bank quotes a simple interest rate of 12% on…

A: Simple interest: $24,000APR (assuming simple interest): 8%Effective APR (considering compensating…

Q: A loan is offered with monthly payments and a 9.75 percent APR. What's the loan's effective annual…

A: APR = 0.0975n = Number of compounding 12 (i.e. monthly compounding)EAR = ?EAR is annual rate after…

Q: A $7,500.00 demand loan was taken out on March 4 at a fixed interest rate of 7.66% with fixed…

A: In demand loans, the lender has the right to "call" the loan, demanding full repayment immediately…

Q: Assume the credit terms offered to your firm by your suppliers are 2/15, net 30 . Calculate the cost…

A: Discount % = 2% Credit Period = 30 daysDiscount Period = 15 daysNumber of day in a year = 365

Q: A store will give a 2.5% disount on the cost of purchase if you pay cash today. The payment is due…

A: Effective annual rate (EAR) is a measure of the true annual interest rate that takes into account…

Q: One of your customers has just made a purchase in the amount of $26,400. You have agreed to payments…

A: A loan is a debt amount borrowed by one person from another person at a predetermined financial…

Q: A supplier grants credit terms of 1/5, net 30. What is the effective annual rate of the discount on…

A: Given;Discount = 1%Allowed payment days = 30Discount days = 5Effective rate of discount = ?…

Q: A company borrows $126,500 from a bank. The interest rate on the loan is 10 percent compounded…

A: Loans are paid by periodic payments and these are fixed payment that carry the payment of interest…

Q: Newsome Inc. buys on terms of 4/10, net 45. It does not take the discount, and it generally pays…

A: Effective annual percentage = (1+[Discount rate/(1–Discount Rate)])^n– 1 Where n= No. of days in a…

Q: Trade credit terms of 2/10, net 90 are available. Calculate the cost of trade credit when payment is…

A: Trade credit is an important source of liquidity and financing for any company. The company needs to…

Q: What is the EAR?

A: Interest = loan amount * interest rate = $10,000*0.13 = $1,300Next, we calculate the points paid on…

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.