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What is the total amount of cash discounts allowed in a year

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Reference no: EM131805099

Annual credit sales of Nadak Co. total $332.6 million. The firm gives a 1.75% cash discount for payment within 10 days of the invoice date; 85% of Nadak's accounts receivable are paid within the discount period.

Required:

(a) What is the total amount of cash discounts allowed in a year? (Enter your answer in millions (e.g., 32.12)). Round your answer to 3 decimal places.)

(b) What should be the approximate annual rate of return on investment that Nadak Co.'s cash discount terms represent to customers who take the discount? Note: (Assume a credit period of 30 days and 360-days year). (Round your percentage answer to 1 decimal place (i.e., 32.1)).

 

Reference no: EM131805099

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