Question
Annual credit sales of Nadak Co. total $352.3 million The firm gives a 2.75% cash discount for payment within 10 days of the invoice date;
Annual credit sales of Nadak Co. total $352.3 million The firm gives a 2.75% cash discount for payment within 10 days of the invoice date; 75% of Nadak's accounts receivable are paid within the discount period.
Required:
(a)
What is the total amount of cash discounts allowed in a year? (Enter your answer in millions. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Total amount $ million
(b)
What should be the approximate annual rate of return on investment that Nadak Co.'s cash discount terms represent to customers who take the discount? Note: (Assume a credit period of 30 days and 360-days year). (Round your answer to 1 decimal place. Omit the "%" sign in your response.)
ROI %
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