What is the effective annual cost of trade credit

Assignment Help Financial Management
Reference no: EM131356035

Your supplier offers terms of 1.1/8, net 45. What is the effective annual cost of trade credit if you choose to forgo the discount and pay on day 45? The effective cost of the trade credit is   %? (Round to two decimal places).

Reference no: EM131356035

Questions Cloud

Decrease in the annual flotation cost tax savings : Five years ago, NorthWest Water (NWW) issued $50,000,000 face value of 30-year bonds carrying a 14% (annual payment) coupon. NWW is now considering refunding these bonds. It has been amortizing $3 million of flotation costs on these bonds over their ..
Effective annual interest rate on lending arrangement : You’ve worked out a line of credit arrangement that allows you to borrow up to $45 million at any time. The interest rate is .49 percent per month. In addition, 6 percent of the amount that you borrow must be deposited in a non-interest-bearing accou..
Estimated quarterly sales for the next year : The Grain and Feed Store purchases are equal to 68 percent of the following quarter's sales. The accounts receivable period is 15 days and the accounts payable period is 30 days. Assume there are 30 days in each month. The store has estimated quarter..
What is duration if the yield to maturity : Find the duration of a 6% coupon bond making annual coupon payments if it has three years until maturity and a yield to maturity of 6.7%. What is the duration if the yield to maturity is 10.7%?
What is the effective annual cost of trade credit : Your supplier offers terms of 1.1/8, net 45. What is the effective annual cost of trade credit if you choose to forgo the discount and pay on day 45? The effective cost of the trade credit is   %?
Standard deviation of minimum variance portfolio : The stock of Bruin, Inc., has an expected return of 22 percent and a standard deviation of 35 percent. The stock of Wildcat Co. has an expected return of 14 percent and a standard deviation of 40 percent. The correlation between the two stocks is .40..
What is weight of each stock in minimum variance portfolio : Consider two stocks, Stock D, with an expected return of 20 percent and a standard deviation of 36 percent, and Stock I, an international company, with an expected return of 6 percent and a standard deviation of 16 percent. The correlation between th..
Credit terms offered to your firm by your suppliers : Assume the credit terms offered to your firm by your suppliers are 2.6?/4, Net 30. Calculate the cost of the trade credit if your firm does not take the discount and pays on day 30.
What is this firm cost of equity : Photo Imaging, Inc. has paid annual dividends of $1.00, $1.05, $1.10, and $1.18 per share over the last four years, respectively. The stock is currently selling for $38 a share. What is this firm's cost of equity?

Reviews

Write a Review

Financial Management Questions & Answers

  Bushels of wheat have an initial margin requirement

Assume that futures on 50 bushels of wheat have an initial margin requirement of $12 per contract and a maintenance margin requirement of $7 per contract. Consider also a buyer and seller of 100 contracts for wheat futures initiated in period 0 and s..

  Debt-to-assets ratio assuming the firm uses only debt

Ratio Calculations Assume the following relationships for the Brauer Corp.: Sales/total assets 1.4x Return on assets (ROA) 4% Return on equity (ROE) 13% Calculate Brauer's profit margin assuming the firm uses only debt and common equity. Round your a..

  Should they invest in corporate bonds or municipal bonds

Factor into your analysis the return they would receive after tax liabilities, based on the bonds having a $1,000 par value and the Sampsons being in a 25% marginal tax bracket.

  Plan for retirement instead of relying on social security

Why do you plan for retirement instead of relying on social security to take care of you?

  What is the expected value for the stock in year seven

Wheat Inc. has just paid its annual dividends of $2.10. The company is expected to pay the same $2.10 dividend for year 1 and 2. After that dividends is expected to grow at an annual rate of 18% for 3 years, then at 12% for 2 years, then dividend is ..

  Investors expect the market rate of return

Investors expect the market rate of return this year to be 15.00%. The expected rate of return on a stock with a beta of 1.3 is currently 19.50%. If the market return this year turns out to be 12.80%, how would you revise your expectation of the rate..

  What is the current stock price-what will the stock price

The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.15 per share on its stock. The dividends are expected to grow at a constant rate of 7 percent per year indefinitely. Investors require a return of 12 percent on the company's stock. a. Wh..

  Projected growth at rate of dividends for this stock

Digging Deep Company's common stock is currently selling for $177.87 per share. Next year, the company dividend is expected to be $12.92 per share. The projected growth at a rate of dividends for this stock is 2.40 percent per year. What rate of retu..

  The gallery expects to bring in additional cash flows

Cortez Art Gallery is adding to its existing buildings at a cost of $2 million. The gallery expects to bring in additional cash flows of $520,000, $700,000, and $1,000,000 over the next three years. Given a required rate of return of 10 percent, what..

  What is the maximum profit and loss for position

An investor purchases a stock for $45 and a put option for $.85 with a strike price of $41. The investor also sells a call option for $.85 with a strike price of $54. What is the maximum profit and loss for this position?

  Calculate the average cash flow from the mine

A silver mine can yield 16,000 ounces of silver at a variable cost of $34 per ounce. The fixed costs of operating the mine are $56,000 per year. In half the years, silver can be sold for $50 per ounce; in the other years, silver can be sold for only ..

  Calculate the payback period and net present value

The cash flow for projects A, B, and C are given below.  - Calculate the payback period and net present value for each 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!

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