User Account

All Pages

What is the amount of costly trade credit

Assignment Help Finance Basics
Reference no: EM131597100

Northeast Baptist buys $500,000 of a particular item (at gross prices) from its major supplier, Cardinal Health, which offers NE Baptist terms of 3/20, net 60. Currently, the hospital is paying the supplier the full amount due on Day 60, but it is considering taking the discount, paying on Day 20 and replacing the trade credit with a bank loan that has a 12 percent rate.

a. What is the amount of free trade credit that Baptist obtains from Cardinal Health? (Assume 360 days per year throughout this problem.)

b. What is the amount of costly trade credit?

c. What is the approximate annual cost of the costly trade credit?

d. Should Baptist replace its trade credit with the bank loan? Explain your answer.

e. If the bank loan is used, how much of the trade credit should be replaced?

Reference no: EM131597100

Questions Cloud

Propose three ways that hr can use competitive advantage : Propose three ways that HR can use competitive advantage in the marketplace to recruit new applicants in general.
What are the nal and irr of the lease : What are the NAL and IRR of the lease? Should the computer system be purchased?
Examine two ways that companies can recruit qualified job : Examine two ways that companies can recruit qualified job applicants. Provide a sense of direction in an ever changing business environment to the organization.
Assume initially that the systems both have average risk : Assume initially that the systems both have average risk. Which one should be chosen?
What is the amount of costly trade credit : What is the amount of costly trade credit? What is the approximate annual cost of the costly trade credit?
What is the economic order quantity : a. What is the economic order quantity? b. How many orders will be placed annually?
Current market conditions : Given a required rate of return of 15 percent, determine the following:
Capital structure for the black hills surgery center : The capital structure for the Black Hills Surgery Center is provided below. The company plans to maintain its debt structure in the future
What are six creative family rituals : What are six creative family rituals that might be appropriate suggestions for this purpose and tell what function you think these rituals could serve.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd