How much is the cost of failing to take the discount

Assignment Help Financial Accounting
Reference no: EM132977557

Question -

1. Tan Company owes $40,000 to one of its suppliers. The supplier has offered a trade discount of 2/10 net 30. Tan Company can borrow the funds from either of two banks: Metrobank will loan the funds for 20 days at a cost of $400; Chinabank offers a discounted loan for 20 days at a cost of $320.

a. How much is the cost of failing to take the discount?

b. How much is the effective interest rate on each of the loans?

c. Should Tan Company take the cash discount?

d. What bank loan should Tan Company use?

2. Kyong Company buys on terms 2/10, net 30, but generally does not pay until the 40 days after invoice date. Its purchases total is $2,160,000 per year. Assuming 360 days a year, how much is the amount of "non-free" trade credit used by the firm on the average each year?

Reference no: EM132977557

Questions Cloud

What should be the market price of the stock be : If investors require a 17% return and the growth rate in dividends is expected to be 8%, what should be the market price of the stock be
What amount of investment income should be reported : The remaining life of the equipment is 5 years. What amount of investment income should be reported for current year
What is the eup for dm : Normal losses are accounted to be part of the product costs while excess loss shall be treated as period costs. What is the EUP for DM
Conduct a search on the web for mobile applications : Conduct a search on the Web for Mobile Applications. Give examples of three Mobile Applications and what business functions they may support
How much is the cost of failing to take the discount : Chinabank offers a discounted loan for 20 days at a cost of $320. How much is the cost of failing to take the discount
Estimate the current return on promotion expenditures : Estimate the current return on promotion expenditures (increase of promotion expenditures by $2m, ceteris paribus). Assume an incremental margin of 44.1%
Prepare an overhead analysis sheet : Prepare an overhead analysis sheet showing how overhead costs should be apportioned between the departments and explain reasons suggesting
What is the interest rate : What is the interest rate, r when the present value of a perpetuity is $53,200 and the payments are $10,000? The first payment occurs one year from now
How much income before income taxes hot fuss corp report : Hot Fuss leased the building to Sam's Town Company for $300,000 a year. How much income before income taxes will Hot Fuss Corp. report

Reviews

Write a Review

Financial Accounting Questions & Answers

  Calculate the current market price of bond

9 years left to maturity. Today, the YTM on your bond is 8%. With this information, can you calculate the current market price of your bond?

  Discuss whether damages should be recognised as a liability

What would you recommend to the owners the item be recorded as? Justify your answer with reference to the Conceptual Framework definition

  Create amortization schedule for the full bond term

Determine the selling price of the bonds. Round amount to the nearest whole dollar. Make amortization schedule for the full bond term.

  What is the actual rate mr banker is charging

Mr. Banker loans money at an APR of 20 percent. Interest is compounded quarterly. What is the actual rate (EAR) Mr. Banker is charging on his loans?

  Compute the value of the stock

Compute the value of this stock. A firm does not pay a dividend. It is expected to pay its first dividend of $0.28 per share in three years.

  Calculate the economic value added

Calculate the economic value added assuming its cost of capital is 10%.

  Calculate the irr for each of the investments

Using a financial calculator, calculate the IRR for each of the investments. State your answers in percentages rounded to two decimal places.

  How do determine what is the growth rate

Br. 32.50 per share and its required rate of return is 10.5%. the dividend is expected to grow at some constant rate forever. What is the growth rate.

  Discuss the tax consequences of the transfer

Transfer $100,000 from his RRSP to Liz as part of the equalization payment. They would like you to explain the tax consequences of this transfer.

  Cost and benefit analysis as part of a business case

Describe the components of a cost/benefit analysis as part of a business case. In preparing a business case regarding the need for a HRIS, what key components would be included in this communication? Provide a thorough explanation of each component.

  What is the value of the NPV for this project

The tax rate is 25 percent and the required return for the project is 11 percent. What is the value of the NPV for this project

  How much money will have saved at the end of year

Suenette plans to save $600 at the end. If she earns 3.4 percent interests on her savings, how much money will she have saved at the end of Year 5?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd