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Simple? Simon's Bakery purchases supplies on terms of 1.0/10, net 25. If Simple? Simon's chooses to take the discount? offered, it must obtain a bank loan to meet its? short-term financing needs. A local bank has quoted Simple? Simon's owner an interest rate of 12.0% on borrowed funds. Should Simple? Simon's enter the loan agreement with the bank and begin taking the? discount?? (Use 365 days for a? year.)
Simple? Simon's can earn an effective rate of ____%. (Round to one decimal place)
Should Simple? Simon's enter the loan agreement with the bank and begin taking the? discount? (Select the best choice? below.)
A. Simple? Simon's will earn 27.7% on its purchases by paying within the discount period and should enter into the loan agreement.
B. Simple? Simon's will earn 15.8% on its purchases by paying within the discount period and should enter into the loan agreement.
C. The discount rate of 1.0% is considerably lower than the 12.0% interest? rate, so Simple? Simon's should not enter into the loan agreement.
D. Need more information to answer the question.
You own the following portfolio of stocks. What is the portfolio weight of stock C?
Current sales are $360,000, current assets $80,000, accounts payable $15,000, accruals $5,000, net profit margin of 5% with a 50% dividend payout. If I expect sales to increase by 20% and no fixed assets are needed, what is my external funds requi..
“In an inflationary environment, it is possible for corporate income to increase more than proportionately to the rate of inflation.” Do you agree or disagree with the above statement? JUSTIFY your position.
Your company has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $40. You are thinking of buying TargetCo, which has earnings per share of $2, 1 million shares outstanding, and a price per share of $25. Wha..
Nimoy Inc., purchased their only fixed asset, a widget machine, four years ago for $7.8 million. The same machinery can be sold today to Shatner Inc. for $4.65 million. What is the current market value of Nimoy's equity (common & preferred) if the m..
The firm normally keeps an $85,000 balance in their checking account. Calculate the effective interest rate.
The Litzenberger Company has projected the following quarterly sales amounts for the coming year: Q1 Q2 Q3 Q4 Sales $ 730 $ 760 $ 840 $ 920 a. Accounts receivable at the beginning of the year are $320. Litzenberger has a 45-day collection period. Cal..
Amigo Gas Co. is selling off some old equipment it no longer needs because its associated project has come to an end. The equipment originally cost $27,500, of which 75% has been depreciated. The firm can sell the used equipment today for $5,000, and..
Suppose he S&P 500 index is 1100 and that it is possible to lend at 4% and borrow at 7%. Above what futures price is there arbitrage? Below what futures price is there arbitrage?
What is the bond's current yield. What is the bond's yield to maturity.
Calculate the nominal annual cost of nonfree trade credit under each of the following terms. Assume payment is made either on the due date or on the discount date. Assume 365 days in year for your calculations. Do not round intermediate calculations.
valuating capital budgeting projects. what is the pitfalls of balanced scorecard. explain the spoilage in process costing. explain difference between absorption costing and marginal costing
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