What are the nominal and effective costs of trade credit

Assignment Help Financial Management

Reference no: EM131054836

Grunewald Industries sells on terms of 1/10, net 30. Gross sales last year were $4,171,500, and accounts receivable averaged $438,000. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers?

Reference no: EM131054836

Questions Cloud

Piece of newly purchased industrial equipment costs : A piece of newly purchased industrial equipment costs $982,000 and is classified as seven-year property under MACRS. The MACRS depreciation schedule is shown in Table 10.7. Calculate the annual depreciation allowances and end-of-the-year book values ..

What is the companys target debtequity ratio : Lorre, Inc., recently issued new securities to finance a new TV show. The project cost $14 million, and the company paid $725,000 in flotation costs. In addition, the equity issued had a flotation cost of 7 percent of the amount raised, whereas the d..

Issued perpetual preferred stock : Ezzell Corporation issued perpetual preferred stock with a 10% annual dividend. The stock currently yields 10%, and its par value is $100. What is the stock's value? Suppose interest rates rise and pull the preferred stock's yield up to 15%.

What is the beta of dells underlying business enterprise : In mid-2012, Dell Inc. had a market capitalization of $21 billion, $8 billion in debt, and $13 billion in cash. The estimated equity beta was 1.41. What is the beta of Dells underlying business enterprise?

What are the nominal and effective costs of trade credit : Grunewald Industries sells on terms of 1/10, net 30. Gross sales last year were $4,171,500, and accounts receivable averaged $438,000. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of ..

What is the effective annual return on this investment : Suppose that you deposit $500 at the end of each future month into an account paying 6% (APR). How much will have in your account at the end of the 5 years? What is the effective annual return (EAR) on this investment?

What are the cash receipts : If Excel Inc. has projected sales of $40,000 in January, $30,000 in February, and $20,000 in March; 20% of sales are in cash and 80% of sales are on credit ( whitch are collected in the month following the sale); What are the cash receipts for Februa..

Firm normally look like after leveraged buyout : How does a leveraged buyout work? What does the debt structure of the firm normally look like after a leveraged buyout? What might be done to reduce the debt?

Pros and cons of accrual accounting and cash accounting : The pros and cons of Accrual Accounting and Cash Accounting have been a subject of debate for quite some time. Today, Accrual Accounting is the more prevalent method of accounting. However, it was not all that long ago that Cash Accounting was the pr..

User Account

All Pages