What is the nominal rate and effective rate

Reference no: EM132801793

Question -

Q1. As a retailer, you buy merchandise every day on terms of 2/15 net 40. The total purchase for a year is IDR 500 million.

a. What does the 2/15 mean?

b. What does net 40 mean?

c. You always pay for these purchases on the 15th day for the full discount. What is the nominal rate and effective rate of this credit purchase? Explain.

d. What is your average accounts receivable?

Q2. In the spot market, Rp14,300 can be exchanged for 1 US $ and the exchange rate between the US dollar (US $) and the Canadian dollar (C $) is 1 US $ = 1.50 C $. What is the cross rate between Rupiah to Canadian dollar?

Q3. What are the main differences between the APV (Adjusted Present Value), FCFE (Free Cash Flow to Equity) approach, and the corporate valuation model for analyzing mergers? Explain.

Q4. The difference between a forward contract and a future contract? Explain.

Reference no: EM132801793

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