Effective annual rate of interest

Assignment Help Financial Management
Reference no: EM131049058

Company X sells on a 2/15, net 60, basis. Customer Y buys goods with an invoice of $4,500. a. How much can company Y deduct from the bill if it pays on day 15? Discount $ b. How many extra days of credit can company Y receive if it passes up the cash discount? Number of days days c. What is the effective annual rate of interest if Y pays on the due date rather than day 15? (Use 365 days in a year. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Effective annual rate %

Reference no: EM131049058

Questions Cloud

Analysis of the ethical issue : Watch the 2 videos below (video no. 1 fast food ads Vs reality experiment) and (video no. 2 misleading labeling) then answer the following questions on each video. Recognition of the ethical issue and Analysis of the ethical issue
Share price at the end of supernormal growth : Bear Co. is growing quickly. Dividends are expected to grow at a rate of 25 percent for the next three years, with the growth rate falling of to a constant 5 percent thereafter. If the required return is 15 percent and the company just paid a $2.88 d..
Bonds to support its expansion plans : Bear Co. wants to issue a new 10-year bonds to support its expansion plans. The company currently has 5.3 percent coupon bonds on the market that sell for $1,075, make semiannual payments and mature in 10 years. The face value of the bond is $1,000. ..
Considering purchase of new petroleum processing equipment : Odessa Oil Company is considering the purchase of new petroleum processing equipment. The relevant data for the alternative under consideration are presented below. Odessa Oil Company’s minimum attractive rate of return is 7%. Determine the number of..
Effective annual rate of interest : Company X sells on a 2/15, net 60, basis. Customer Y buys goods with an invoice of $4,500. a. How much can company Y deduct from the bill if it pays on day 15? Discount $ b. How many extra days of credit can company Y receive if it passes up the cash..
Compare the performance of your by-hand encoder/decoder : If possible, compare the performance of your "by-hand" encoder/decoder with the corresponding XDR routines.
Two different bonds currently outstanding : Jallouk Corporation has two different bonds currently outstanding. Bond M has a face value of $50,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $1,600 every six months over the subsequent eight years, and ..
What strategies would you like to recommend to board of lidi : Given the changes currently taking place in the UK supermarket industry what strategies would you like to recommend to the Board of Lidl in order to improve their profitability and image with the public
Prepare the budgets for the months of july : BAC104 Management Accounting Fundamentals - Prepare the Budgets for the months of July, August and September and for the quarter - Total Production Cost Incurred Budget

Reviews

Write a Review

Financial Management Questions & Answers

  Hedge funds different from mutual funds

In what ways are hedge funds different from mutual funds?

  Type of firms are most likely to payout cash dividends

Find the sample standard deviation for a security that has three one –year returns of 5%, 10%, and 15%. Which of the following investment evaluation tools is considered to be the best capital budgeting decision tool? Which of the following type of fi..

  Explain the costs and benefits of immigration

Explain the costs and benefits of immigration. What other costs or benefits to immigration would you add to this list? What are some immigration policies that you agree with? What are some that you disagree with? Why

  Find the values for lump sum assuming annual compounding

Money has different values based on time. Money in your pocket has a current value, but money owed to you has a varying value based on how sure it is that you will receive it and when. Find the following values for a lump sum assuming annual compound..

  The great temperature debate

The employer is a small, nonunion furniture manufacturer with 15 employees engaged in interstate commerce. Both of the employees involved in this case worked in the machine shop building as band-saw operators. On what grounds might the employer try t..

  What is the value of their shares of stock

Paradise Adventures just paid a dividend of $2.00. They are growing rapidly and are expecting to grow dividends at 20% for the next two years and then 10% in the third year before reducing the dividends to a constant growth rate of 3%. If the require..

  New project with high-coupon bond vs. low-coupon bond

When do you think the firm should consider financing a new project with high-coupon bond vs. low-coupon bond? The factors you could consider could include (but not limited to): external capital market conditions, central bank policies, and firm chara..

  The firms net income-total dollar returns to investors

Seattle Health Plans currently uses zero debt financing. Its operating income (EBIT) is $1 million, and it pays taxes at a 40 percent rate. It has $5 million in assets and because it is all-equity financed $5 million in equity. the firm's net income?..

  Calculate the present value for the following annuity

You will receive $1,000,000 lump-sum, 25 years later. The discount rate is 3.25%. Using the equation/calculator method, determine the "present value.

  Why bonds are known as fixed income securities

Which of these statements answers why bonds are known as fixed income securities?

  Constant-growth dividend discount model

A firm pays a current dividend of $2, which is expected to grow at a rate of 7% indefinitely. If the current value of the firm’s shares is $214, what is the required return applicable to the investment based on the constant-growth dividend discount m..

  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 3/13, net 57. 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?

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