Question

You place an order for 2,000 units of Good X at a unit price of $57. The supplier offers terms of 3/25, net 50.

a-1. How long do you have to pay before the account is overdue?

a-2. If you take the full period, how much should you remit? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

b-1. What is the discount being offered? (Enter your answer as a percent.)

b-2. How quickly must you pay to get the discount?

b-3. If you do take the discount, how much should you remit? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

c-1. If you don’t take the discount, how much interest are you paying implicitly? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

c-2. How many days’ credit are you receiving? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Answer 1

Solution:-

A-1. How long do you have to pay before the account is overdue-

There is 50 days untill account is overdue. After 50 days account became overdue.

A-2. If you take the full period, how much should you remit-

Remittance Amount = 2,000 units * $57

Remittance Amount = $1,14,000

B-1. What is the discount being offered-

Discount is offered about 3%.

B-2. How quickly must you pay to get the discount-

If you make payment within 25 days you are eligible for discount.

B-3. If you do take the discount, how much should you remit-

Remittance Amount = 2,000 units * $57 (1-0.03)

Remittance Amount = $1,10,580.

C-1. If you don’t take the discount, how much interest are you paying implicitly-

Implicit interest is difference between two Remittance Amount.

Implicit Interest = $1,14,000 - $1,10,580

Implicit Interest = $3,420

C-2. How many days’ credit are you receiving-

Credit days = 50 - 25

Credit days = 25 days

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