Compute effective interest rate

Assignment Help Corporate Finance

Reference no: EM1359173

32. Slipshod Machine Tool Co. owes $40,000 to one of its suppliers. The supplier has offered a trade discount of 2/10 net 30. Slipshod can borrow the funds from either of two banks: First City Bank will loan the funds for 20 days at a cost of $400; Upstart Bank offers a discounted loan for 20 days at a cost of $320.

a) What is the cost of failing to take the discount?
b) What is the effective interest rate on each of the loans?
c) Which alternative should Slipshod follow?

Reference no: EM1359173

Questions Cloud

Preparing for life after graduation : Explain the resources and how you can use them to better your educational experience and help you find a job after you graduate.

How large video memory is required to store image : How large a video memory is required to store a 640 X 480 image during display? A 1600 X 900 image? A 1440 X 1080 image?

Effective-interest method of amortization : Assuming that interest is computed annually, at what carrying value should the total liability for these bonds be reported two years later on December 31, 2012, if the effective-interest method of amortization is used?

Analyzing feedback within supply chain at ebbd : the difference between what was predicted and the actual result. Forecast errors can be used as feedback to help improve future predictions.

Compute effective interest rate : Slipshod Machine Tool Corporation owes $40,000 to one of its suppliers. The supplier has offered a trade discount of 2/10 net 30. Slipshod can borrow the funds from either of two banks:

Illustrate what is the effect of westland expansionary : Illustrate what is the effect of Westland's expansionary monetary policy on Eastland's nominal exchange rate in the short run and in the long run.

What are the currents that the block can carry : what are the currents that the block can carry.

Write complete payroll program for a company : Now, write a complete PAYROLL program for a company in which each employee falls into one of the 3 categories - Administrative, FactoryEmployee or Salesperson.

Difficulties in interviewing child victims of sexual abuse : Child sexual abuse is, unfortunately, a pervasive crime, and one that can often be difficult to prosecute. Discuss some difficulties in interviewing child victims of sexual abuse

User Account

All Pages