Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a . How large would the accounts payable balance be if Malone takes discounts? Do not round intermediate calculations. Round your answer to the nearest

a. How large would the accounts payable balance be if Malone takes discounts? Do not round intermediate calculations. Round your answer to the nearest dollar.
$
How large would the accounts payable balance be if it does not take discounts and pays in 30 days? Do not round intermediate calculations. Round your answer to the nearest dollar.
$
b. How large must the bank loan be if Malone takes discounts? Do not round intermediate calculations. Round your answer to the nearest dollar.
$
How large must the bank loan be if Malone doesn't take discounts? Do not round intermediate calculations. Round your answer to the nearest dollar
$
c. Assuming a 360-day year, what are the nominal and effective costs of costly trade credit? Do not round intermediate calculations. Round your answers to two decimal places.
Nominal rate:
Effective rate:
What is the effective cost of the bank loan? Round your answer to two decimal places.
%
Based on these costs, what should Malone do?
-Select-
d. Assume number.
$
If Malone's tax rate is 40%, then what is the effect on its net income due to the lost discount when it reduces its accounts payable to $285,000? Do not round intermediate calculations. Round your answer to the nearest cent.
The net income --select-vv by $
How much would Malone have to borrow? (Hint: Malone will receive a tax deduction due to the lost discount, which will affect the amount it must borrow.) Do not round intermediate calculations. Round your answer to the nearest cent.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurial Finance

Authors: Steven Rogers

4th Edition

1260461440, 978-1260461442

More Books

Students also viewed these Finance questions