WebCFIN chapter 16. Which of the following statements is correct? 1) Under normal conditions the shape of the yield curve implies that the interest cost of short-term debt is greater than that of long-term debt, although short-term debt has other advantages that make it desirable as a financing source. 2) Flexibility is an advantage of short-term ... WebJan 14, 2024 · Calculate that effective annual cost of each of the following trade credit terms and payment dates: a. 1/10, net 30, paying on day 20. b. 2/10, net 40, paying on day 30. ... Effective Annual Credit Cost Formula = Discount (%) / ( 1 - Discount) x 360 / ( Allowed Days - Discount Days) Credit Terms Explanation Effective Interest 1/10 net 30 …
Solved Calculate the effective cost of the following trade
WebQ: Cost of Trade Credit Calculate the nominal annual cost of trade credit under each of the following…. A: The nominal rate of credit = Discount rate1-discount rate×365credit period-discount perioid 1. The…. Q: On a 365-day basis, using a trade credit terms of 2/10, net 30, and payment is made on the twentieth…. WebAnswered by Prof-Oluoch177. Assume that its trade credit terms are 4/10, net 60 and Mackenzie pays on day 20. Using a 365 day year, what is Mackenzie's Effective Annual Rate (EAR) cost of trade credit? This means that the customer will get a discount of 4% if paid within 10 days, and if discount is not availed, the amount is due in 60 days. ides of march stock market
Solved Your supplier offers terms of 3/20, net 45. What is - Chegg
WebWe should use the formula above to calculate the effective annual interest rate for using trade credit. r = [3% / (100 – 3%)] × [365 / (50 – 20)] = 37.63% If the buyer is able to raise short-term financing at a lower effective annual interest rate, it should take an early payment discount and pay for the goods at the end of the discounting ... WebQ: Cost of Trade Credit What are the nominal and effective costs of trade credit under the credit…. A: The formula used is shown: DP= Discount Percentage P= Discount Period DCO= Days credit Outstanding. Q: On a 365-day basis, what is the rate per period of using trade credit if terms are 2/10, net 30, and…. A: On making payment till 10th ... WebAssume that its trade credit terms are 4/10, net 60 and Mackenzie pays on day 20. Using a 365 day year, what is Mackenzie's Effective Annual Rate (EAR) cost of trade credit? USE FORMULA: issaquah girls soccer