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 the nominal and effective cost of such a credit? Do not round intermediate calculations. Round your answers to two decimal places. Use 365 day in a year.

Nominal cost: ? %

Effective cost: ? %

If the company could receive the funds from a bank at a rate of 7.85%, interest paid monthly, based on a 365-day year, what would be the effective cost of the bank loan? Do not round intermediate calculations. Round your answer to two decimal places.

? %

Expert Solution

jeff jeffy answered 1 year ago

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...

Quantitative Problem: Adams Manufacturing Inc. buys $8.5 million of materials (net of discounts) on terms of...

Quantitative Problem: Adams Manufacturing Inc. buys $8.5 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...

Quantitative Problem: Adams Manufacturing Inc. buys $9 million of materials (net of discounts) on terms of...

Quantitative Problem: Adams Manufacturing Inc. buys $9 million of materials (net of discounts) on terms of 2/10, net 60; 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? Round your answer to the nearest cent. Do not round intermediate calculations. Use 365 day in a year. $ What would be the nominal and effective cost of...

Lancaster Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 75;...

Lancaster Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 75; and it currently pays on the 5th day and takes discounts. Lancaster plans to expand, which will require additional financing. Assume 365 days in year for your calculations. If Lancaster decides to forgo discounts, how much additional credit could it obtain? Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest cent. What would...

Lancaster Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 60;...

Lancaster Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 60; and it currently pays on the 5th day and takes discounts. Lancaster plans to expand, which will require additional financing. Assume 365 days in year for your calculations. If Lancaster decides to forgo discounts, how much additional credit could it obtain? Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest cent. $ What...

Newsome Inc. buys on terms of 4/10, net 45. It does not take the discount, and...

Newsome Inc. buys on terms of 4/10, net 45. It does not take the discount, and it generally pays after 55 days. What is the effective (not nominal) annual percentage cost of its non-free trade credit, based on a 365-day year? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

Cash Discounts Suppose a firm makes purchases of $3.85 million per year under terms of 2/10,...

Cash Discounts Suppose a firm makes purchases of $3.85 million per year under terms of 2/10, net 30, and takes discounts. Assume 365 days in a year for your calculations. Do not round A. What is the average amount of accounts payable net of discounts? (Assume that the $3.85 million of purchases is net of discounts - that is, gross purchases are $3,928,571, discounts are $78,571, and net purchases are $3.85 million.) Round your answer to the nearest dollar. $...

The Reynolds Company buys from its suppliers on terms of 2/10, net 58. Reynolds has not...

The Reynolds Company buys from its suppliers on terms of 2/10, net 58. Reynolds has not been utilizing the discount offered and has been taking 70 days to pay its bills. The suppliers seem to accept this payment pattern, and Reynold’s credit rating has not been hurt. Mr. Duke, Reynolds Company’s vice-president, has suggested that the company begin to take the discount offered. Mr. Duke proposes the company borrow from its bank at a stated rate of 11 percent. The...

Milberg Manufacturing sells on terms of 2/10, net 30. Total sales for the year are ...

Milberg Manufacturing sells on terms of 2/10, net 30. Total sales for the year are $3,500,000. Twenty five percent of customers pay on the 10th day and take discounts; the other 75% pay, on average, 45 days after their purchases. a. What is the days sales outstanding? b. What is the average amount of receivables? c. What would happen to average receivables if Snider toughened its collection policy with the result that all nondiscount customers...

Cash Discounts Suppose a firm makes purchases of $3 million per year under terms of 3/10,...

Cash Discounts Suppose a firm makes purchases of $3 million per year under terms of 3/10, net 30, and takes discounts. Assume 365 days in a year for your calculations. Do not round intermediate calculations. What is the average amount of accounts payable net of discounts? (Assume that the $3 million of purchases is net of discounts - that is, gross purchases are $3,092,784, discounts are $92,784, and net purchases are $3 million.) Round your answer to the nearest dollar....

Question