Find firms annual lost cash discounts and annual penalties

Assignment Help Financial Management

Reference no: EM13927120

The Eaton Company needs to raise $250,000 to expand its working capital and has been unsuccessful in attempting to obtain an unsecured line of credit with its bank. The firm is considering stretching its accounts payable. Eaton's suppliers extend credit on terms of "2/10, net 30." Payments beyond the credit period are subject to a 1½ percent per month penalty. Eaton purchases $100,000 per month from its sup- pliers and currently takes cash discounts. For this problem, assume that a year consists of twelve 30-day months. Assuming that Eaton is able to raise the $250,000 it needs by stretching its accounts payable, determine the following:

a. The firm's annual lost cash discounts

b. Annual penalties

c. The annual financing cost of this source of financing.

Reference no: EM13927120

Questions Cloud

Synthesize the system modeling tools : For this assignment, use the identified system topic from the prior assignments and synthesize the system modeling tools applicable to your chosen system topic. Recommend how you would design your chosen system topic to address each subsystem of t..

Quality management stresses : Total quality management stresses the importance of teamwork.

Examining the various provisions of the agreement : Review the sample term sheet located in the Doc Sharing folder. After examining the various provisions of the agreement, prepare a one- to two-page paper explaining:

Explain importance of top level leadership in organization : Determine guidelines for exercising authority. What guidelines would you recommend for reward power and coercive power? Explain the importance of top level leadership within organizations. Why is it important

Find firms annual lost cash discounts and annual penalties : Determine the firms annual lost cash discounts, Annual penalties and The annual financing cost of this source of financing.

Probability of getting heads on at least one flip : What is the probability of getting heads on onlyone of your flips? The cases favorable to the event E1 of getting heads on only one of your flips are,

Manager role in the development of a business document : The purpose of this assignment is for you to step into a manager's role in the development of a business document. Please respond to the scenario below in the form of a PowerPoint. In your presentation, consider the steps Guffey and Loewy (2011) o..

Values between acceptance and rejection of this hypothesis : Given a sample size of 36, with sample mean 670.3 and sample standard deviation 114.9, we perform the following hypothesis test.Null Hypothesis

Statistical consultant confronts ethical issues article : Read the Reflection Before Action: The Statistical Consultant Confronts Ethical Issues article. Read the article A Christian View of the Foundations of Statistics article.

User Account

All Pages