Firm earn when customer does not take discount

Assignment Help Financial Management

Reference no: EM131924267

1. Terms of Sale. A firm offers terms of 1/10, net 30. What effective annual interest rate does the firm earn when a customer does not take the discount? Without doing any calculations, explain what will happen to this effective rate if:

A. The discount is changed to 2 percent.

B. The credit period is increased to 40 days.

C. The discount period is decreased to 20 days.

D. What is the EAR for each scenario?

2. What are the implications for a company’s Weighted Average Cost of Capital and Minimum Required Free Cash Flow Return on Assets if a company only uses Equity capital to finance its investment in Total Assets?

Reference no: EM131924267

Questions Cloud

At what levels management development training be offered : At what levels within an organization should management development training be offered? Do you think that this type of training should only be offered.

What was the social meaning of the event : Describe your reminiscence - What were your feelings about the occasion? Where did these feelings come from? Why

What you think would happen if the structure is damaged : As you read the chapter on the brain. How it relates to the larger picture of human behavior, and what you think would happen if the structure is damaged.

Analysing the performance of your target company : Assuming the role of a forward looking, socially conscious investor you are required to draft a business report analysing the performance of your target company

Firm earn when customer does not take discount : Terms of Sale. A firm offers terms of 1/10, net 30. What effective annual interest rate does the firm earn when a customer does not take the discount?

Discuss about the employee retention training : You are right in stating that training programs can be difficult if budget constraints won't allow for the added expense to run them.

Explain effect of sympathetic or parasympathetic stimulation : The autonomic nervous system is involve in many unconscious. Explain the effect of both sympathetic and parasympathetic stimulation on each behavior you choose.

What made each an effective leader : What made each an effective leader? How did each influence the lives of others positively or negatively?

Which situation would you implement as an hr manager : As a mentor for new faculty members here at the University, I have the opportunity to help newly trained faculty members teach their first online class.

User Account

All Pages