Average amount of accounts payable net of discounts.

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Answer 1

Question

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

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Suppose a firm makes purchases of $3.65 million per year under terms of 2/10, net 30, and takes discounts. What is the average amount of accounts payable net of discounts? (Assume the $3.65 million of purchases is net of discounts—that is, gross purchases are $3,724,489.80, discounts are $74,489.80, and net purchases are $3.65 million.) Is there a cost of the trade credit the firm uses? If the firm did not take discounts but did pay on the due date, what would be its average payables and the nominal and effective costs of this nonfree trade credit? What would be the firm’s nominal and effective costs of not taking discounts if it could stretch its payments to 40 days?

(16-15) Cash Discounts Suppose a firm makes purchases of $3.65 million per year under terms of 2/10, net 30, and takes discounts. a. What is the average amount of accounts payable net of discounts? (Assume the $3.65 million of purchases is net of discounts-that is, gross purchases are $3,724,489.80, discounts are $74,489.80, and net purchases are $3.65 million.) b. Is there a cost of the trade credit the firm uses? c. If the firm did not take discounts but did pay on the due date, what would be its average payables and the cost of this nonfree trade credit? d. What would be the firm's cost of not taking discounts if it could stretch its payments to 40 days?

Would you only answer the last question please Thank you !

Answer 2

Question

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

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Answer 3

Question

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

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Answer 4

Question

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

Expert Solution & Answer

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Answer 5

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

Answer 6

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

Answer 7

Chapter 16, Problem 15P

a)

Summary Introduction

To determine: Average amount of accounts payable net of discounts.

Answer 8

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

Answer 9

b)

Summary Introduction

To discuss: Whether the firm uses any cost of trade credit in this situation.

Answer 10

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

Answer 11

c)

Summary Introduction

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

Answer 12

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

Answer 13

d)

Summary Introduction

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 16 - Define each of the following terms: Working...Ch. 16 - What are the two principal reasons for holding...Ch. 16 - Prob. 3Q Ch. 16 - Prob. 4Q Ch. 16 - Prob. 5Q Ch. 16 - Prob. 6Q Ch. 16 - Prob. 7Q Ch. 16 - Prob. 8Q Ch. 16 - What kinds of firms use commercial paper? Ch. 16 - Prob. 1P

Average amount of accounts payable net of discounts.

Solution Summary: The author calculates the average amount of accounts payable net of discounts. Person X views that there is no cost of trade credit at the current situation.

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To determine: Average amount of accounts payable net of discounts.

To discuss: Whether the firm uses any cost of trade credit in this situation.

To determine: Average payables and nominal and effective costs of non-free trade credit when firm did not take any discounts but payment made on due date.

To determine: Nominal and effective costs, when it could stretch payments to 40 days.

Want to see the full answer?

Chapter 16 Solutions