Solution-Cost of trade credit and bank loan

Cost of trade credit and bank loan

Reference no: EM133075435

Cost of Trade Credit and Bank Loan

XYZ Inc. buys $10 million of materials (net of discounts) on terms of 3/5, net 60, and it currently pays on the 5th day and takes discounts. XYZ plans to expand, which will mean additional financing.

If XYZ decides to forgo discounts, could it obtain much additional credit?
What would be the nominal and effective cost of that credit?
What would be the effective cost of the bank loan if the company could get the funds from a bank at a rate of 8 percent and if the interest was paid monthly? All of this should be based on a 365-day year.
Should XYZ use bank debt or additional trade credit? Explain.

Reference no: EM133075435

Questions Cloud

Calculate the percentage return-average-standard deviation : Calculate a percentage return using the formula (New-Old)/Old for each of those months. Use the close number. (You may ignore dividends for this project.)

How much will hector have to pay out of pocket : Hector recently had some dental work done which qualifies and the total cost was $125. How much will Hector have to pay out of pocket

Develop-monitor and manage investment portfolio : Investment plays an important role in personal financial planning. Most people invest their money to enhance their current income and to reach their financial g

What are the adjusting entries necessary at december : A partial trial balance of Indigo Corporation is as follows on December 31, 2021. What are the adjusting entries necessary at December

Cost of trade credit and bank loan : XYZ Inc. buys $10 million of materials (net of discounts) on terms of 3/5, net 60, and it currently pays on the 5th day and takes discounts. XYZ plans to expand

What is the bank lcr : A bank has an adjusted amount of $536 million in high-quality liquid assets, and $425 million in adjusted potential outflows, with an additional $75 million in

How much tax will he pay on the sale of these investments : Two years ago, Sanjay purchased 2,500 units in a Canadian start-up company called Here We Go Inc. for $15,000. On October 22, 2021, he sold 1,250 shares when th

Find out the risk adjusted cost of capital of company a : Question - Find out the risk adjusted cost of capital of Company A with the following information - Foreign Investment Risk 4%

Average annual growth rate of dividends : What was the average annual growth rate of dividends for this firm? Round the answer to two decimal places in percentage form

User Account

All Pages

Cost of trade credit and bank loan

Reference no: EM133075435

Reference no: EM133075435

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

What is the present value of financial instrument

Vedder inc has 5 million shares of common stock outstanding

Why do many firms choose to issue stock dividends what is

Confidence interval estimate of the mean daily income

At what value should the land be recorded

Evaluate how much will have for the trip

What is the value of a stock that has an expected dividend

Prepare the balance sheet after the partnership formation

Determining the undervalued-overvalued stock

Compute the prices deltas and gammas of the bonds

What is your best estimate for the market value of equity

How does iso in terms of manufacturing relate to an industry

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT