Question

In: Accounting

assume a seller has a WACC of 10% and wants to offer terms of 1/5, n/15...

assume a seller has a WACC of 10% and wants to offer terms of 1/5, n/15 and the average credit sale is 100,000, what is the benefit(cost) of offering the discount to the seller?

Solutions

Expert Solution

offer terms of 1/5, n/15

Means that if paid in 5 days .... 1% discount is allowed, otherwise payable in 15 days with no discount.

Thus 1% is the cost for 10 days of finance ( i.e from 5th day to 15th day). In annual terms it is 1% * 365 days / 10 days. = 36.5%

Cost of offering the discount to the seller = 36.5% - 10% = 26.5%

If answer is needed in dollars = 100,000 * 26.5% = 26500

note

If 360 days year is taken for calculation......... the final values will change as 26% and $ 26000

ekkarill92 answered 3 years ago
Next > < Previous

Related Solutions

1.Assume that X is a hypergeometric random variable with N = 15, S = 5, and...
1.Assume that X is a hypergeometric random variable with N = 15, S = 5, and n = 5. Calculate the following probabilities. (Round your answers to 4 decimal places.) a p(x=1) b p(x=5) c p(x≥2) 2. Consider the following discrete probability distribution. x −20 −5 10 20 P(X = x) 0.44 0.18 0.09 a. Complete the probability distribution. (Round your answer to 2 decimal places.) b. What is the probability that the random variable X is positive? (Round your...
1. Consider the following data set: D= (5, 10, 15, 15, 5, 10, 15, 15, 5,...
1. Consider the following data set: D= (5, 10, 15, 15, 5, 10, 15, 15, 5, 10, 15, 15) SD= 4.33 How would you add a number to this set while keeping the SD the same? 2. tossing a coin 50 times A. from the 50 flips compute the proportion of heads from your 50 flips. B. For a 95% confidence level find the z critical value C. compute the 95% confidence interval for p, the margin of error from...
GXY Corp. has a WACC of 15%, a cost of debt capital of 5%, and a...
GXY Corp. has a WACC of 15%, a cost of debt capital of 5%, and a market value debt-to-equity ratio of 0.10. GXY Corp. is not subject to taxation. Suppose that GXY Corp. increased it market value debt-to-equity ratio to 0.35, What will be the change in GXY Corp’s WACC? Enter your answer as a percent; do not include the % sign. Round your final answer to two decimals.
GXY Corp. has a WACC of 15%, a cost of debt capital of 5%, and a...
GXY Corp. has a WACC of 15%, a cost of debt capital of 5%, and a market value debt-to-equity ratio of 0.10. GXY Corp. is not subject to taxation. Suppose that GXY Corp. increased it market value debt-to-equity ratio to 0.35, What will be the change in GXY Corp’s WACC? Enter your answer as a percent; do not include the % sign. Round your final answer to two decimals.
June 1 Sold merchandise to Avery & Wiest for $10,000; terms 1/5, n/15, FOB destination (cost...
June 1 Sold merchandise to Avery & Wiest for $10,000; terms 1/5, n/15, FOB destination (cost of sales $7,150). 2 Purchased $5,400 of merchandise from Angolac Suppliers; terms 3/10, n/20, FOB shipping point. 4 Purchased merchandise inventory from Bastille Sales for $12,400; terms 3/15, n/45, FOB Bastille Sales. 5 Sold merchandise to Gelgar for $12,000; terms 1/5, n/15, FOB destination (cost of sales $8,200). 6 Collected the amount owing from Avery & Wiest regarding the June 1 sale. 12 Paid...
1. Jackson purchased $ 550 of goods and received credit terms of 5​/15​, ​n/30. How much...
1. Jackson purchased $ 550 of goods and received credit terms of 5​/15​, ​n/30. How much did he pay if payment was made during the discount​ period? (Round any intermediate calculations to the nearest​ cent, and your final answer to the nearest​ dollar.) A. $ 523 B. $ 550 C. $ 578 D. $ 468 2. Jemco bought goods for $ 340 on credit. Jemco returned $ 30 worth of goods. Terms of the sale were 3​/10, ​n/30. If Jemco...
1. A class has 15 girls and 10 boys. The teacher wants to form an unordered...
1. A class has 15 girls and 10 boys. The teacher wants to form an unordered pair consisting of 1 girl and 1 boy. How many ways are there to form such a pair? 2. For the same setup (i.e. class of 15 girls and 10 boys), the teacher wants to form an unordered group of 3, consisting of 2 girls and 1 boy. How many ways are there to form such a group? 3. For the same setup (i.e....
QUESTION 5: Assume that the growth in problem 4 is 15%, 10%, and then constant at...
QUESTION 5: Assume that the growth in problem 4 is 15%, 10%, and then constant at 5%. What is the current price? Round answer to 2 decimal places (XX.XX) PROBLEM 4: If the last dividend paid was $1.75 and growth is a constant 5%, what is the current price if the required return is 11%? Round answer to 2 decimal places (XX.XX) ANSWER TO PROB 4: 30.63
A seller at a farmer's market wants $10 for a bag of 10 apples. You think...
A seller at a farmer's market wants $10 for a bag of 10 apples. You think his price is too high, so you counter with an offer of $6 for the bag. The seller then offers you a much smaller bag of five apples for $6. You bargain again, and the seller lets you buy the 10 apples for $8. This scenario is an example of: a centrally planned market. a shortage. a market in action. perfect competition.
A company purchased $11,900 of merchandise on June 15 with terms of 2/10, n/45, and FOB...
A company purchased $11,900 of merchandise on June 15 with terms of 2/10, n/45, and FOB shipping point. The freight charge, $1,450, was added to the invoice amount. On June 20, it returned $2,320 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT