Assume credit terms offered to your firm by your suppliers

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Reference no: EM131309647

1. Assume the credit terms offered to your firm by your suppliers are 3.4/6, Net 30. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30. The effective annual cost of the trade credit is (Round to two decimal places.)

2. The Fast Reader Company supplies bulletin board services to numerous hotel chains nationwide. The owner of the firm is investigating the benefit of employing a billing firm to do her billing and collections. Because the billing firm specializes in these services, collection float will be reduced by 22 days. Average daily collections are $1,300, and the owner can earn 7% annually (expressed as an APR with monthlycompounding) on her investments. If the billing firm charges $275 per month, should the owner employ the billing firm? The benefits are $ nothing. (Round to the nearest dollar.)

Reference no: EM131309647

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