Effective annual rate if buyer does not take cash discount

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Reference no: EM132057377

1. What’s the effective annual rate (EAR) if the buyer does not take the cash discount?

a. 15.12%.

b. 18.36%.

c. 10.12%.

d. 20.24%.

2. Last year, Plastics Inc. paid cash to purchase land located besides its factory plant at a price of $1.75 million. Today, the land has a market value of $1.90 million. The company is now considering building a new warehouse on that site. The constuction cost of the warehouse is estimated at $2.15 million, $650,000 worth of grading, draining, utility work, and paving will be required. What is the initial cash flow of tis project?

Reference no: EM132057377

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