Calculate the cost or interest rate applied

Assignment Help Finance Basics
Reference no: EM133110425

Your company has purchased inventory on terms of a cash discount if your company can pay within a certain amount of days, 2/16 net 90. Your cash flows are such that you cannot pay within the discount date of the terms but can pay within the 90 days. Your company has a line of credit with its bank and can borrow funds from the bank at 15 percent per annum.

a. Calculate the cost or interest rate applied if your company does not take the cash discount. Show all your calculations for full marks.

b. Should your company borrow the funds from the bank to pay the purchase within the discount period? Using your calculations above to support your answer.

Reference no: EM133110425

Questions Cloud

Estimate a capm regression of a total stock market : Suppose you estimate a CAPM regression of a total stock market index fund (average return of 12% annually before expenses) using net returns of the fund (i.e.,
What is monica investment behavior : Monica asked that we meet to see if I could help to reduce the differences between them. When the time came, she started the conversation by saying that Richard
Difference between one person corporation and partnership : What is the difference between One Person Corporation and Partnership? n your opinion, is a One Person Corporation better than the ordinary/regular Corporation
Find value of one right during the cum-rights period : A stock trades for $11 per share. It announces a rights offering with the following terms: 5 rights are required to purchase 1 share. The subscription price is
Calculate the cost or interest rate applied : a. Calculate the cost or interest rate applied if your company does not take the cash discount. Show all your calculations for full marks.
Compute spartan foreign source gross income : Spartan sells its quidgets to Australian customers through its wholly owned Australian subsidiary. Compute Spartan foreign source gross income
Case study-preston corporation : Preston Corporation has a bond outstanding with a $90 annual interest with a semiannual coupon payment, a market price of $1,086, and a maturity date in 10 year
What is the value of the cca tax shield : The Sisyphean Company is considering a new project that will have a CCA deduction of $2.5 million in the first year. If Sisyphean's marginal corporate tax rate
Calculate the margin required for opening short sale : An investor sold short 1000 shares of ABC $30 per share. The stock is eligible for reduced margin.

Reviews

Write a Review

Finance Basics Questions & Answers

  Identify the main advantage of bond ratings and determine

Identify the main advantage of bond ratings, and determine

  What is the incremental free cash flow for year one

The new machine will be depreciated using the simplified straight-line method over its 5 year useful life, resulting in expected to increase by $10000 at the inception of the project, but this amount will be recaptured at the end of year five. Wha..

  Prepare a pro forma income statement for the ebit level

abe forrester and three of his friends from college have interested a group of venture capitalists in backing their.

  Possible reasons business

What could be the possible reasons business? Underlying the company's decision to diversify into software

  Are the deferred shareholders entitled to voting rights

Are the deferred shareholders entitled to voting rights and dividend payout?

  Ordinary annuity and the price

County Ranch Insurance Company wants to offer a guaranteed annuity in units of $500, payable at the end of each year for 25 years.

  What are same possible ways that corporate accountants might

Free cash how is often considered a more reliable measure of a company's income than reported earnings. What are same possible ways that corporate accountants might be able to change their earnings to portray a more favorable earnings statement?

  Computation of various financial ratios

Computation of various financial ratios from the given information and obtained from the accounting records of Hamberg Company at the end of its fiscal year

  Identification of the types of products the new store

Develop a plan for the store for lawn and garden merchandise- a general sales pkan,for the new store planning, identification of the types of products

  What would the annual yield to maturity be on the bond

Fresh Fruit, Inc. has a $1,000 par value bond that is currently selling for $1,126. It has an annual coupon rate of 15%, paid semiannually, and has 17 years.

  How much must she deposit now in a savings account

How much must she deposit now in a savings account that pays 2 percent compounded monthly to have the money she needs in three? years?

  Mike net profit on the call option

What was Mike's net profit on the call option? Use a minus sign to enter loss values, if any. Round your answer to the nearest dollar.

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!

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