Calculate interest rate associated with not taking discount

Assignment Help Financial Management

Reference no: EM131316773

Access Enterprises is vetting four possible suppliers of an important raw material used in its production process, all offering different credit terms. The products offered by each supplier are virtually identical. The following table shows the credit terms offered by these suppliers. Assume a 365-day year.

Supplier	Credit Teams
A	1/10 net 40
B	2/20 net 90
C	1/20 net 60
D	3/10 net 75

a. Calculate the interest rate associated with not taking the discount from each supplier.

b. If the firm needs short-term funds, which are currently available from its commercial bank at 11 percent, and if each of the suppliers is viewed separately, which, if any, of the suppliers' cash discounts should the firm not take? Explain why.

c. What impact, if any, would the fact that the firm could stretch its accounts payable (net period only) by 20 days from supplier A have on your answer in part (b) relative to this supplier?

Reference no: EM131316773

Questions Cloud

What is the optimal order quantity in the newsboy model : Extend the procedure for simultaneously managing the inventory of three products, characterized by a joint-order replenishment policy.

Create an estate planning strategy : TAX 665 Final Project Part - Create an estate planning strategy, showing versatility of thought, that will minimize estate and gift tax liability over the course of the client's life span, potentially another 30 years. Assure that as little future..

Calculate the financial ratios for the assigned company : Calculate the financial ratios for the assigned company's financial statements, and then interpret those results against company historical data as well as industry

What are foreseeable costs and benefits from supply chain : What are the foreseeable costs and benefits from supply chain operations in Haiti? How could you ensure that your company's involvement would play a beneficial role in Haiti's economic recovery?

Calculate interest rate associated with not taking discount : What impact, if any, would the fact that the firm could stretch its accounts payable (net period only) by 20 days from supplier A have on your answer in part (b) relative to this supplier?

Explain the key contributing factors : Explain the key contributing factors that you believe led to bullying behaviors. Next, suggest at least three (3) ways in which prevention programs can reduce bullying cases overall

Discuss about the environmental health and safety project : The incident or project could be one that you have researched or been involved with. Your essay must include the following:summary of the project or incident,identification of the hazardous material(s) involved and hazardous classification,discussion..

Illustrate idea by writing the expression for \select in sql : Thus, the SQL keyword SELECT can also be written select, Select, or sElEcT, for instance. Show how to write a regular expression for a keyword in a caseinsensitive language. Illustrate the idea by writing the expression for \select" in SQL.

Perform and make sense of statistical analysis : CO 510: RESEARCH METHODS - Data analysis you will be supplied with a data set from a study in communication research, and will "complete" the study by performing statistical analysis and interpretation of results

User Account

All Pages