User Account

All Pages

What is the approximate annual cost of costly trade credit

Assignment Help Accounting Basics
Reference no: EM132866127

Question - 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.

Required -

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: EM132866127

Questions Cloud

Taylor and rioux refer to as the work of reproduction : Both Norma and Shimu are working-class women in societies characterized by class and gender inequality. How does their identity as women shape the way they expe
How struggle has played out on the issues of immigration : How struggle has played out on the issues of immigration and health care since 2008. In your answer, be sure to mention specific executive
What is business intelligence : -What is Business Intelligence? The answer to this question can vary as the term means many different things to many different people.
List two high priority action items : you would include in a consulting report to Steve Morgan, President of ElectroLogic. did you select these two actionable items.
What is the approximate annual cost of costly trade credit : Northeast Baptist buys $500,000 of a particular item (at gross prices) from its major supplier, What is the approximate annual cost of the costly trade credit
What ways does the claim have scientific validity : Could fate be avoided if scientists, engineers and societies across the world alter their energy and transportation systems to lessen greenhouse gas emissions?
What was the catastrophic event : What communication strategy did your chosen company use and did you feel is was an effective approach?
How successful international agreement on limit greenhouse : Why was the Montreal Protocol of 1987 a success, whereas the ability to cap global greenhouse gas emissions by binding treaty has met with less success
Mitigate the impact of risks on portfolio : Describe how a portfolio manager may help to mitigate the impact of these risks on portfolio.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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