What is the EAR of the lower cost source

Assignment Help Accounting Basics
Reference no: EM132698839

Problem - Clicker Corporation must raise $50,000 to support operations for the next 12 months. Clicker buys from its suppliers on terms of 2.5/20, net 80, and it normally pays on Day 20 to take the cash discounts; but, it could forgo the discounts and pay on Day 90 to get the needed amount in the form of non-free trade credit. Alternatively, Clicker can borrow from its bank using a one-year discount interest loan that has a 12 percent quoted interest rate and requires a 15 percent compensating balance. Clicker normally maintains a negligible deposit at the bank. What is the EAR of the lower cost source? Assume the face value of the bank loan is $50,000.

Reference no: EM132698839

Questions Cloud

What is the process capacity : What is the process capacity and what is the bottleneck? What is the throughput time for a typical cake?
Define business intelligence : How would one define business intelligence (BI)? Identify and briefly discuss a real-world application of BI?
What is the EAR of the lower-cost loan : Simple interest loan with a 12 percent quoted rate and no compensating balance, What is the EAR of the lower-cost loan
Forecast march demand using exponential smoothing model : a) Using a smoothing constant of a=.20, forecast March demand using the exponential smoothing model.
What is the EAR of the lower cost source : Clicker normally maintains a negligible deposit at the bank. What is the EAR of the lower cost source? Assume the face value of the bank loan is $50,000
Described as concept known as pest : A business environment is often affected by many variables often described as the concept known as PEST.
Why revenue model is a part of the business model : As a student of Business, state and justify why online shopping is better than in -store shopping ? Why revenue model is a part of the business model.
What happens to leftover fresh : What happens to leftover fresh produce (such as fruits and vegetables) and perishable products (milk, egg, bread, etc.) at grocery stores in the US?
Explain the murray concept of personology : Murray saw life as a story about a person's "needs" and "presses." Explain Murray's concept of personology as distinct from personality.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Explain whether frame division manager should accept offer

At a normal volume of 250 000 frames per year, production costs per frame are as follows: Explain whether the Frame Division Manager should accept the offer

  Dubois inc has 600000 to invest the company is trying to

dubois inc. has 600000 to invest. the company is trying to decide between two alternative uses of the funds. one

  Describe a biometric time recording system and its advantage

Using an Internet search engine, search for the phrase biometric time clock (be sure to include the quotation marks). Based on your search results, describe a biometric time recording system and its advantages.

  Applying course concepts and enterting

Discuss how the concepts of this course can be applied to your current or future work position. Discuss whether or not you feel adequately prepared to enter the accounting profession as a Certified Public Accountant.

  What are some potential pros and or cons of this decision

All required questions were answered and given valid points. The required two replies to two other classmates' posts are detailed and is valuable

  Compare two countries in attitudes toward capital punishment

Based on several large studies, a researcher knew that 40 percent of the public in the United States favored capital punishment, 35 percent were against it.

  What is the effective interest rate for the given discount

On May 10, the company purchased inventory from Jay Company for $70,000, What is the effective interest rate for the given discount terms

  How much do you need to deposit today in a bank

You need to have $250,000 to pay for your rental property in 15 years. How much do you need to deposit today in a bank that pays 5% interest

  General accounting principles

"General Accounting Principles" Please respond to the following:

  What is the stocks value

Assume that the dividend growth rate estimate is increased to a constant 7 percent per year. What is the stock's value

  What should be the gross profit recognized

Monroe Construction Company uses the percentage-of-completion method of accounting. What should be the gross profit recognized in 2013?

  How does single audit act affect audits of entities

How does Single Audit Act affect audits of entities that receive federal financial assistance? How do its requirements differ from AICPA audit requirements?

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