Effective annual percentage cost of non-free trade credit

Assignment Help Financial Management
Reference no: EM13917396

Howes Inc. purchases $4,562,500 in goods per year from its sole supplier on terms of 2/14, net 58. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its non-free trade credit? (Assume a 365-day year.) (Note: Write your answer in percentage format; i.e., write 1% instead of 0.01.)

Reference no: EM13917396

Questions Cloud

Develop a process layout that will minimize : Assume a distance of 35 feet between the reception area and each potential location. Use the formatshown. Develop a process layout that will minimize the total distance
Assume the reverse distances are thesame : The locations of centers 1 and 3 are assigned as shown in the accompanying diagram. Assuming transportation costs are $ 1 per load per meter develop a suitable layout that minimizes transportation costs using the given information. Compute the tot..
What is the break-even salvage value in dollars : Petrus Company has a unique opportunity to invest in a two-year project in Australia. The project is expected to generate 5,125,000 Australian dollars (A$) in the first year and 5,242,000 Australian dollars in the second. What is the break-even salva..
Compute the future value : For each of the following, compute the future value (Enter rounded answers as directed, but do not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16)): Present Value Years Interest Rate Future Value..
Effective annual percentage cost of non-free trade credit : Howes Inc. purchases $4,562,500 in goods per year from its sole supplier on terms of 2/14, net 58. If the firm chooses to pay on time but does not take the discount, what is the effective annual percentage cost of its non-free trade credit?
What is the firms investment in accounts receivable : Tauscher Textiles Corporation has an inventory conversion period of 45 days, a receiva-bles collection period of 32 days, and a payables deferral period of 35 days. If Tauscher's sales are $2,309,028 and all sales are on credit, what is the firm's in..
What is the value of company based on correct calculation : LIS Company has $50 million in long-term debt, $75 million in shareholder’s equity [both figures are market value basis]. The cost of equity is 14%, cost of long-term debt is 12% and the tax rate is 25%. What is the weighted average cost of capital [..
What is the value of company based on correct calculation : LIS Company has $50 million in long-term debt, $75 million in shareholder’s equity [both figures are market value basis]. The cost of equity is 14%, cost of long-term debt is 12% and the tax rate is 25%. What is the weighted average cost of capital [..
Currently operate under system of floating exchange rates : The cash flows relevant for a foreign investment should, from the parent company's perspective, include the financial cash flows that the subsidiary can legally send back to the parent company plus the cash flows that must remain in the foreign count..

Reviews

Write a Review

Financial Management Questions & Answers

  Deferred tax liability-capital gains offer over dividends

Goodwin Technologies, a relatively new company, has been wildly successful but has yet to pay a dividend. An analyst forecasts that Goodwin is likely to pay its first dividend three years from now. "Investors prefer the deferred tax liability that ca..

  Capital budgeting and dividend policy

We examined two very important topics in finance this week; Capital Budgeting and Dividend Policy.

  Quantity restrictions are equivalent to using corrective tax

Quantity restrictions are equivalent to using a corrective tax. Quantity restrictions with tradable permits are equivalent to using a corrective tax. Mandating equal pollution reductions from all firms is equivalent to using a corrective tax.

  Phases of the acquisition process

Closing is included in which of the following phases of the acquisition process?

  Utilization of cash flow analysis is setting the bid price

Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus, the bid price represents a financial break-even level for the project..

  Recognizing and discuss inferences and faulty logic

Identifying and applying useful data and information and demonstrate logic to interpret data - Recognizing and discuss inferences and faulty logic.

  With a positive amount invested in each stock

With a positive amount invested in each stock, the more the stocks move together and the higher their covariance or correlation, the more volatile the portfolio will be. Stocks in the same industry tend to have more highly correlated returns than sto..

  What would compu be willing to pay for cellus stock

CellU, the company CompU is looking at purchasing, expected their dividend to grow at a rate of 35 percent for the next four years, then to drop to a growth rate of 15 percent for 2 more years, and then settle down to a 10 percent growth rate thereaf..

  Monetary ease without drawing unfavorable publicity

The Federal Reserve Board of Governors has decided to ease monetary conditions to counter early signs of an economic downturn. Because price inflation has been a burden in recent years, the Board is eager to avoid any action that the public might int..

  Government bond matures-what is the yeild to the investor

A US government bond matures in 10 years. Its quoted price is now 96.4, which means the buyer will pay $96.40 for each $100 of the bond's face value. The bond pays 5% interest on its face value each year. If $10,000 (the face value) worth of these bo..

  What are the bonds yield to call

Jim Robertson Motors has bonds outstanding which will mature in 12 years. The bonds pay a 12 percent semiannual coupon and have a face value of $1,000 (i.e., the bonds pay a $60 coupon every six months). The bonds currently have a yield to maturity o..

  What price would you estimate for halliford stock

Halliford Corporation expects to have earnings this coming year of $3/share. Halliford plans to retain all of its earnings for the next two years. Then, for the subsequent two years, the firm will retain 50% of its earnings. It will retain 20% of its..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd