Given correct answer Accounting Your firm wishes to determine whether or not to extend credit to a customer whohas ordered 100 boxes of product from your firm that you sell for $23 a box andwhich costs the firm $17 per box. Which of the following comes closest to theprobability of paying that would make the firm indifferent to handing out the credit?(Assume that the customer will make only one order.)a) 7.0%b) 10.0%c) 23.4%d) 30.0%e) 73.9%

Step 1: Define Trade CreditTrade credit extended to customers can be highly beneficial to a company…

Answered: Your firm wishes to determine whether…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter23: Other Topics In Working Capital Management

Section: Chapter Questions

Problem 8MC

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Assume the credit terms offered to your firm by your suppliers are 4/15, net 30. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30
Assume the credit terms offered to your firm by your suppliers are 2/20, net 40. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 40. (Hint: Use a 365-day year.)
Why is some trade credit called free while other credit is called costly? If a firm buys on terms of2/10, net 30, pays at the end of the 30th day, and typically shows $300,000 of accounts payableon its balance sheet, would the entire $300,000 be free credit, would it be costly credit, or wouldsome be free and some costly? Explain your answer. No calculations are necessary.
McGriff Dog Food Company normally takes 30 days to pay for average daily credit purchases of $9,730. Its average daily sales are $10,010, and it collects accounts in 32 days. a. What is its net credit position? Net credit position b-1. If the firm extends its average payment period from 30 days to 37 days (and all else remains the same), what is the firm's new net credit position? (Negative amount should be indicated by a minus sign.) Net credit position b-2. Has the firm improved its cash flow? Yes No
Subject - account Please help me. Thankyou.
A4)
McGriff Dog Food Company normally takes 28 days to pay for average daily credit purchases of $9,540. Its average daily sales are $10,710, and it collects accounts in 32 days.a. What is its net credit position? b-1. If the firm extends its average payment period from 28 days to 38 days (and all else remains the same), what is the firm's new net credit position? (Negative amount should be indicated by a minus sign.)
Financial accounting
A large retailer obtains merchandise under the credit terms of 1/10, net 30, but routinely takes 60 dyas to pay its bills.(Because the retailer is an important customer, suppliers allow the firsm to stretch its credit terms.) What is the retailers effective cost of trade credit?
Give true solution for this general accounting question
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8. Cost of trade credit Firms usually offer their customers some form of trade credit. This allowance comes with certain terms of credit, which affect the cost of asset of sale for the buyer as well as the seller. Consider this case: Green Moose Industries buys most of its raw materials from a single supplier. This supplier sells to Green Moose on terms of 4/15, net 30. The cost per period of the trade credit extended to Green Moose, rounded to two decimal places, is 4.17% Green Moose's trade credit has a nominal annual cost of decimal places, and your final answer to two decimal places.) The effective annual rate (EAR) of the supplier's trade credit is , assuming a 365-day year. (Note: Round all intermediate calculations to four If Green Moose Industries's supplier shortens its discount period to five days, this will increase the cost of the trade credit.

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