Fundamentals of Corporate Finance with Connect Access Card
Fundamentals of Corporate Finance with Connect Access Card
11th Edition
ISBN: 9781259418952
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 20.A, Problem 1ACQ
Summary Introduction

To determine: The incremental investment in receivables

Introduction:

The accounts receivables approach is primarily focused on the incremental investments in receivables rather than increasing gross profit.

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The maturity value of an $35,000 non-interest-bearing, simple discount 4%, 120-day note is:
Carl Sonntag wanted to compare what proceeds he would receive with a simple interest note versus a simple discount note. Both had the same terms: $18,905 at 10% for 4 years. Use ordinary interest as needed. Calculate the simple interest note proceeds.   Calculate the simple discount note proceeds.
What you're solving for    Solving for maturity value, discount period, bank discount, and proceeds of a note.        What's given in the problem    Face value: $55300 Rate of interest: 10% Length of note:   95 days Date of note: August 23rd Date note discounted: September 18th   Bank discount rate:9 percent

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Fundamentals of Corporate Finance with Connect Access Card

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