Question

In: Finance

Simple​ Simon's Bakery purchases supplies on terms of 1.3 divided by 10 comma net 271.3/10, net...

Simple​ Simon's Bakery purchases supplies on terms of 1.3 divided by 10 comma net 271.3/10, net 27. If Simple​ Simon's chooses to take the discount​ offered, it must obtain a bank loan to meet its​ short-term financing needs. A local bank has quoted Simple​ Simon's owner an interest rate of 10.1% on borrowed funds. Should Simple​ Simon's enter the loan agreement with the bank and begin taking the​ discount? ​ (Use 365 days for a​ year.)

Solutions

Expert Solution

jeff jeffy answered 4 months ago
Next > < Previous

Related Solutions

Simple​ Simon's Bakery purchases supplies on terms of 1.4/10 comma net 25. If Simple​ Simon's chooses...
Simple​ Simon's Bakery purchases supplies on terms of 1.4/10 comma net 25. If Simple​ Simon's chooses to take the discount​offered, it must obtain a bank loan to meet its​ short-term financing needs. A local bank has quoted Simple​ Simon's owner an interest rate of 11.1% on borrowed funds. Should Simple​ Simon's enter the loan agreement with the bank and begin taking the​discount? ​ (Use 365 days for a​ year.) Should Simple​ Simon's enter the loan agreement with the bank and...
Simple​ Simon's Bakery purchases supplies on terms of 1.0/10 net 25. If Simple​ Simon's chooses to...
Simple​ Simon's Bakery purchases supplies on terms of 1.0/10 net 25. If Simple​ Simon's chooses to take the discount​ offered, it must obtain a bank loan to meet its​ short-term financing needs. A local bank has quoted Simple​ Simon's owner an interest rate of 12.0%on borrowed funds. Should Simple​ Simon's enter the loan agreement with the bank and begin taking the​ discount? ​ (Use 365 days for a​ year.) Ohio Valley Homecare​ Suppliers, Incorporated​ (OVHS) had $20 million in sales...
Trinity Surgical Supplies, Inc. sells on terms of 2/10, net 30. Gross sales for the year...
Trinity Surgical Supplies, Inc. sells on terms of 2/10, net 30. Gross sales for the year are $1.5 million, and the collections department estimates that 25 percent of the customers pay on the tenth day and take discounts; 50 percent pay on the thirtieth day; and the remaining 25 percent pay, on average, 40 days after the purchase. (Assume 360 days per year.) a. What is the firm's average collection period? b. What is the firm's current receivables balance? c....
Suppose a firm makes purchases of Rs 10.95 million per year under terms of 2/10, net...
Suppose a firm makes purchases of Rs 10.95 million per year under terms of 2/10, net 30, and takes discounts. i. What is the average amount of accounts payable net of discounts? (Assume the Rs 10.95 million of purchases is net of discounts—that is, gross purchases are Rs 11,173,469.40, discounts are Rs 223,469.40, and net purchases are Rs 10.95 million.) ii. Is there a cost of the trade credit the firm uses? iii. If the firm did not take discounts...
1. How does payment terms net of 120 days for supplies of PCB impact net working...
1. How does payment terms net of 120 days for supplies of PCB impact net working capital considerations? 2. What is the terminal value? Why is it relevant for capital budgeting?
Adams Manufacturing Inc. buys $11.4 million of materials (net of discounts) on terms of 2/10, net...
Adams Manufacturing Inc. buys $11.4 million of materials (net of discounts) on terms of 2/10, net 50; and it currently pays after 10 days and takes the discounts. Adams plans to expand, which will require additional financing. If Adams decides to forgo discounts, how much additional credit could it obtain? Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to the nearest cent. Use 365 day in a year. ? $    What would be...
Adams Manufacturing Inc. buys $11.9 million of materials (net of discounts) on terms of 2/10, net...
Adams Manufacturing Inc. buys $11.9 million of materials (net of discounts) on terms of 2/10, net 50; and it currently pays after 10 days and takes the discounts. Adams plans to expand, which will require additional financing. If Adams decides to forgo discounts, how much additional credit could it obtain? Assume 365 days in year for your calculations. Do not round intermediate calculations. Round your answer to the nearest cent. $    What would be the nominal and effective cost of...
On June 15, a retailer purchases merchandise on account from a supplier for $2,000 terms 3/10,...
On June 15, a retailer purchases merchandise on account from a supplier for $2,000 terms 3/10, n/30. On June 18, the retailer returns merchandise purchased for $600 for a reduction in the amount owing. On June 22, the retailer pays their account. Under a perpetual inventory system the journal entry to record the payment includes: a. $1,400 will be debited to Accounts Payable, $1,358 will be credited to Cash and $42 will be credited to Inventory. b. $1,358 will be...
Problem 17-11 Terms of Sale [LO 2] A firm offers terms of 1/10, net 30. Requirement...
Problem 17-11 Terms of Sale [LO 2] A firm offers terms of 1/10, net 30. Requirement 1: What effective annual interest rate does the firm earn when a customer does not take the discount? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)   Effective annual interest rate % Requirement 2: What effective annual interest rate does the firm earn if the discount is changed to 2 percent? (Do not round intermediate...
Problem 17-11 Terms of Sale [LO 2] A firm offers terms of 1/10, net 30. Requirement...
Problem 17-11 Terms of Sale [LO 2] A firm offers terms of 1/10, net 30. Requirement 1: What effective annual interest rate does the firm earn when a customer does not take the discount? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)   Effective annual interest rate % Requirement 2: What effective annual interest rate does the firm earn if the discount is changed to 2 percent? (Do not round intermediate...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT