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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An insurance company has liabilities of £7 million due in 10 years' time and £9 million due in 17 years' time. The assets of the company consist of two zero-coupon bonds, one paying £X million in 7 years' time and the other paying £Y million in 20 years' time. The current interest rate is 6% per annum effective. Find the nominal value of X (i.e. the amount, IN MILLIONS, that bond X pays in 7 year's time) such that the first two conditions for Redington's theory of immunisation are satisfied. Express your answer to THREE DECIMAL PLACES.

An individual is investing in a market where spot rates and forward rates apply. In this market, if at time t=0 he agrees to invest £5.3 for two years, he will receive £7.4 at time t=2 years. Alternatively, if at time t=0 he agrees to invest £5.3 at time t=1 for either one year or two years, he will receive £7.5 or £7.3 at times t=2 and t=3, respectively. Calculate the price per £5,000 nominal that the individual should pay for a fixed-interest bond bearing annual interest of 6.6% and is redeemable after 3 years at 110%. State your answer at 2 decimal places.

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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.

Expert Solution & Answer

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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.

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Chapter 16 Solutions