User Account

All Pages

Calculate the cost of not taking a cash discount

Assignment Help Finance Basics
Reference no: EM132466438

The Reynolds Corporation buys from its suppliers on terms of 3/18, net 55. Reynolds has not been utilizing the discounts offered and has been taking 55 days to pay its bills.

Ms. Duke, Reynolds Corporation's vice president, has suggested that the company begin to take the discounts offered. Duke proposes that the company borrow from its bank at a stated rate of 18 percent. The bank requires a 10 percent compensating balance on these loans. Current account balances would not be available to meet any of this compensating balance requirement.  

a. Calculate the cost of not taking a cash discount. (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Cost of not taking a cash discount- %

b. What is the effective rate of interest on the bank loan? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Effective rate of interest- %

c. Do you agree with Duke's proposal?

Yes or No?

Reference no: EM132466438

Questions Cloud

Describe the terms asymmetric information and moral hazard : There is frequent confusion about the terms asymmetric information, moral hazard and adverse selection? Asymmetric information is the cause, moral hazard.
Examine the process of developing business plan : Examine the process of developing a business plan and setting up the company. Analyze money sources for finding and managing funds.
Discuss intersectionality : Discuss Intersectionality. What are the various factors which affect our life chances, and how do they intersect? What do you personally feel is most important
Propose a type of message appeal to be used in advertising : Propose a type of message appeal to be used in the advertising, making sure to explain the rationale behind the appeal. Analyze the different cultures.
Calculate the cost of not taking a cash discount : The Reynolds Corporation buys from its suppliers on terms of 3/18, net 55. Reynolds has not been utilizing the discounts offered and has been taking 55 days to
What types of resources would use in helping a client deal : What types of resources would you use in helping a client deal with their own mortality? Research and post a minimum of three websites or other resources
How does a lack of competition affect prices and output : After reading chapters 5 and 6 and Special Topic 5, write a 2-page paper describing the importance of competition in markets. How does a lack of competition.
Mental issues : The issues, challenges, and opportunities experienced by this group in the labor force. How society has constructed this group's identity.
Describe stroebes dual process model of coping with loss : Describe Stroebe's dual process model of coping with loss. Why do you think this "balance" is important in helping one recover from grief?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd