Please provide solution this financial accounting question Wontaby Ltd. is extending its credit terms from45 to 60 days. Sales are expected to increasefrom $4,770,000 to $5,870,000 as a result.Wontaby finances short-term assets at the bankat a cost of 12 percent annually.Calculate the additional annual financing costof this change in credit terms. (Use 365 days ina year. Do not round intermediate calculations.Round the final answer to the nearest wholedollar.)

Step 1: Define Additional FinancingThe business entities are always progressive and tends to have…

Answered: Wontaby Ltd. is extending its credit…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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Wontaby Ltd. is extending its credit terms from 45 to 60 days. Sales are expected to increase from $4.75 million to $5.85 million as a result. Wontaby finances short - term assets at the bank at a cost of 12 percent annually. Calculate the additional annual financing cost of this change in credit terms. (Use 365 days in a year. Do not round intermediate calculations. Round the final answer to the nearest whole dollar. Enter answer in whole dollar not in million.) Annual financing costN
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