Identify what type of discounts or allowances involved

Assignment Help Financial Management
Reference no: EM131905209

PharmCo, Inc.--a large manufacturer of pharmaceuticals--sells its consumer products exclusively through drug wholesalers--who sell to retail druggists. Wholesalers are allowed a "chain discount" of 35 percent and 10 percent off of the manufacturer's suggested retail list prices.

The wholesalers are then expected to pass the 35 percent discount on to retailers. Recently a large retail drug chain approached PharmCo about buying direct.

PharmCo agreed to sell direct to the chain--and offered a discount of 35 percent. However, the chain wanted the additional 10 percent usually given to wholesalers.

PharmCo felt this would be unfair to those retail druggists who must buy through wholesalers--and refused the chain's request on the grounds that such a discount would be illegal.

Do you agree with PharmCo? Why or why not? Be sure to identify what type(s) of discounts or allowances and which law(s) are involved.

Reference no: EM131905209

Questions Cloud

What is the cost of preferred stock capital for ford : Preferred stock of Ford Motors pays a dividend of $5 each year and trades at a price of $30. What is the cost of preferred stock capital for Ford?
How much data is in the first segment : How much data is in the first segment? In the acknowledgement that Host B sends back to Host A, what will be the acknowledgement number?
What type of plan does a property manager implement : What type of plan does a property manager implement to manage renters who do NOT pay their rent in a timely way?
Compute the future dollar costs of meeting this obligation : Compute the future dollar costs of meeting this obligation using the money market hedge and the forward hedges.
Identify what type of discounts or allowances involved : PharmCo, Inc.--a large manufacturer of pharmaceuticals--sells its consumer products exclusively through drug wholesalers--who sell to retail druggists.
Discuss about the customer service environment : In a customer service environment, is there ever a circumstance in which a company representative should be less than polite with a customer?
Discuss given problem using airport precautions : Despite airport precautions, X hijacked an airplane in Chicago and forced the pilot, crew, and passengers to fly to New York. Upon reaching New York.
Whats the discount rate that would make you indifferent : If you earn 3% interest on your funds, how much will you need to invest today in order to reach your savings goal?
Do you think compensation for senior segment : Do you think compensation for senior segment managers should be tied to segment performance? Why or why not?

Reviews

Write a Review

Financial Management Questions & Answers

  Hat is the company target debt–equity ratio

Goodbye, Inc., recently issued new securities to finance a new TV show. The project cost $13.3 million, and the company paid $655,000 in flotation costs. If the company issued new securities in the same proportion as its target capital structure, wha..

  Pension plan is about to take out ten-year fixed-rate loan

The pension plan is about to take out a 10-year fixed-rate loan for the purchase of an information management system for its operations

  Constructing portfolio of two assets

You are constructing a portfolio of two assets, Asset A and Asset B. What is the optimal Sharpe ratio in a portfolio of the two assets?

  Calculate after-tax rate cash flows and net present value

Calculate the after-tax rate cash flows and the net present value of the cash outflows under each alternative.

  Annual percentage increase in the winner check over period

In 1897, the first Green Jacket Golf Championship was held. What was the annual percentage increase in the winner’s check over this period?

  About the bond yields

Bond Yields. A bond with face value $1,000 has a current yield of 6% and a coupon rate of 8%. (LO6-1) a. If interest is paid annually, what is the bond’s price? b. Is the bond’s yield to maturity more or less than 8%?

  Find cost of debt and equity

(Cost of capital) The company has currently 20 000 shares outstanding. The book value per share is $15. The stock is currently trading at the P/B ratio of 2.0; P/E= 12 and EV/EBITDA=7.5. The company is going to issue 8 000 coupon bonds with the par v..

  Cash flows on a project under consideration

Marielle Machinery Works forecasts the following cash flows on a project under consideration.

  Determine which form of contracting benefit your business

Image your small business that produces very small remote control aircraft capable of long sustained flights. You are ready to expand your business by competing for Department of Defense (DoD) contracts.

  Internal rate of return on this investment

What was Joes internal rate of return on this investment?

  About using your credit card for a cash advance

One of the unpleasant secrets about using your credit card for a cash advance is that there is usually a 6 to 8 percent upfront fee on the amount. The APR on the cash advance is typically lower than the APR for normal purchases. Payments do not apply..

  Pure play approach to determine required return

When calculating WACC using the pure play approach to determine required return, what company's data should i use e.g tax rate, debt? should i use the data for the company that I am computing the required return for or using data for the pure play co..

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