Question
In: Finance
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 would be the nominal cost of that credit? Do not round
intermediate calculations. Round your answer to two decimal
places.
% - What would be the effective cost of that credit? Do not round
intermediate calculations. Round your answer to two decimal
places.
% - If the company could get the funds from a bank at a rate of 7%,
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.
% - Should Lancaster use bank debt or additional trade
credit?
-Select one of the following:
1.-Bank debt
2.Additional trade credit
********PLEASE LABEL ALL 5ANSWERS VERY CLEARLY AND I WILL LEAVE A GOOD REVIEW. ALL PARTS ARE FOR THE SAME QUESTION********
Solutions
jeff jeffy answered 4 months agoRelated Solutions
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...
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...
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...
The Reynolds Corporation buys from its suppliers on terms of 2/11, net 60. Reynolds has not...
The Reynolds Corporation buys from its suppliers on terms of
2/11, net 60. Reynolds has not been utilizing the discounts offered
and has been taking 60 days to pay its bills. Ms. Duke, Reynolds
Corporation's vice president, has suggested that the company begin
to take the discounts offered. Duke proposes that the company
borrow from its bank at a stated rate of 16 percent. The bank
requires a 12 percent compensating balance on these loans. Current
account balances would not...
Leyton Lumber Company has sales of $8 million per year, all on credit terms calling for...
Leyton Lumber Company has sales of $8 million per year, all on
credit terms calling for payment within 30 days, and its accounts
receivable are $1.6 million. Assume 365 days in year for your
calculations.
What is Leyton's DSO? Round your answer to two decimal
places.
What would DSO be if all customers paid on time? Round your
answer to two decimal places.
How much capital would be released if Leyton could take actions
that led to on-time payments? Round...
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....
Exercise 8-11 (Algo) Trade and purchase discounts; the grossmethod and the net method compared [LO8-3]...
Exercise 8-11 (Algo) Trade and purchase discounts; the gross
method and the net method compared [LO8-3] [The following
information applies to the questions displayed below.] Tracy
Company, a manufacturer of air conditioners, sold 140 units to
Thomas Company on November 17, 2021. The units have a list price of
$450 each, but Thomas was given a 20% trade discount. The terms of
the sale were 2/10, n/30. Thomas uses a perpetual inventory system. Exercise 8-11 (Algo) Part 3 3. Prepare the journal entries to...
The Reynolds Corporation buys from its suppliers on terms of 3/18, net 55. Reynolds has not...
The Reynolds Corporation buys from its suppliers on terms of
3/18, net 55. Reynolds has not been utilizing the discounts offered
and has been taking 55 days to pay its bills. Mr. Duke, Reynolds
Corporation vice president, has suggested that the company begin to
take the discounts offered. Duke proposes that the company borrow
from its bank at a stated rate of 18 percent. The bank requires a
10 percent compensating balance on these loans. Current account
balances would not...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- The economic and financial crisis of 2008-2009 represents the most serious economic downturn in the U.S....
- Compare a new venture to an existing company and explain why existing companies can obtain bank...
- When would you want to use value-of-service pricing instead of cost-of-service pricing? When would you like...
- Inventory Control You are the production manager of GVT Manufacturing, a company that manufactures a wide...
- 1. Male whitetail deer produce antlers every year and then shed them after the breeding season....
- Pick any two questions (each question should be half a page) 10. Globalization seems to have...
- Robbins Inc. is considering a project that has the following cash flow and cost of capital...
ADVERTISEMENT