What would be the effective cost of the bank loan

Assignment Help Accounting Basics
Reference no: EM133172956

Question - Lancaster Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 55; and it currently pays on the 5th day and takes discounts. Lancaster plans to expand, which will require additional financing. If Lancaster decides to forgo discounts, how much additional credit could it obtain, and what would be the nominal and effective cost of that credit? If the company could get the funds from a bank at a rate of 9%, interest paid monthly, based on a 365-day year, what would be the effective cost of the bank loan? Should Lancaster use bank debt or additional trade credit? Explain.

Reference no: EM133172956

Questions Cloud

Evaluation of recruiting and selection processes : How can HRMs use metrics to measure the success of the recruiting and selection processes? List 3 metrics that you view as most relevant
Discuss how porter five forces model : Discuss how Porter's Five forces model and Strategic Group Map used in Human Resources management
Explain the meaning of the bonus schemes : Question - Explain the difference between apportionment and allocation of overheads. Explain the meaning of the Bonus Schemes
Sequencing activities properly : Sequencing activities properly is a critical component of project management, whether on a small scale
What would be the effective cost of the bank loan : If the company could get the funds from a bank at a rate of 9%, interest paid monthly, based on a 365-day year, what would be the effective cost of bank loan
Calculate the online addressable market size of category : Cora wants to be a significant player in the Ayurveda market. Calculate the online addressable market size of this category. Which subcategory would you start w
What is cash deposit ratio : Question - What is cash deposit ratio? What causes CDR increase and decrease? How to improve CDR in Islamic banking
What is the cost per equivalent unit for materials costs : The materials cost in the beginning work in process inventory was $2,721. What is the cost per equivalent unit for materials costs
Dynamics of international business : Select a scenario for a global team (one that you are familiar with, or a famous case) and after identifying and analyzing the needs of this team in terms of th

Reviews

Write a Review

Accounting Basics Questions & Answers

  Present all journal entries to be prepared

Present all journal entries to be prepared, in proper format, in 20X2 in order to record all of the transactions related to the extended warranties of 20X1

  High-low method to estimate the cost equation

What is the total estimated cost for 2,600 machine hours using the high-low method to estimate the cost equation?

  The comparative statements of lucille company are presented

Compute the following ratios for 2012. (a) Earnings per share. (h) Days in inventory. (b) Return on common stockholders' equity. (i) Times interest earned.

  How the operating income will increase by the

Calculation used in a CVP analysis is the breakeven point. Once the breakeven point has been reached, operating income will increase by the

  Charles inc began using dollar-value lifo for costing its

charles inc. began using dollar-value lifo for costing its inventory last year base year. the ending inventory this

  What is the effect of the joint venture performance

This joint venture generated income of $440 in the past year and dividends of $200. What is the effect of the joint venture's performance

  What is the difference between capitalization of asset cost

Question - What is the difference between capitalization of an asset cost and an ordinary operating and maintenance expense

  Record the July entry for the payment

Assume the company uses the net method for purchase discounts and the perpetual inventory system. Record the July 19 entry for the payment

  Discuss how much is uncollectible account expenses for 2014

If uncollectible acccounts are determined by the pecentage of sales methods to be 4% of the credit sales

  Prepare a monthly master budget for toyworks for year ended

Prepare a monthly master budget for ToyWorks for the year ended December 31, 2008, including the Sales Budget & Schedule of Cash Receipts.

  A manager is trying to decide whether to buy one machine or

a manager is trying to decide whether to buy one machine or two. if only one is purchased and demand proves to be

  Does the company have enough capitalization

Prepare a cash flow budget. Does the company have enough capitalization? Which month does the company achieve positive cash flow?

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