Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that Guizhou Falls Department Store orders inventory and is offered a cash discount by one of their suppliers with the condition 2/10, net 40.

image text in transcribed

Assume that Guizhou Falls Department Store orders inventory and is offered a cash discount by one of their suppliers with the condition 2/10, net 40. In order for Guizhou Falls to take the cash discount, the company will need temporary financing of $75,000 for 30 days. The local bank offers a loan for 12% per annum (i.e. annual interest). Answer the following questions by entering plain numbers (no currencies, commas or %-signs. don't round during calculations, only round the final amount to 2 decimals) (a) Blank #1: What is the cost of foregoing the cash discount? (b) Blank #2: If Guizhou Falls decides to take the bank loan, how much will they have to pay in interest? (c) Blank #3: What amount would Guizhou Falls need to borrow, if there was a required 8% compensating balance? (d) Blank #4: What would be the interest rate if the interest charge for the offered loan was $937 and if there was a required 8% compensating balance on the loan? (e) Blank #5: Should Guizhou Falls borrow the required amount and realize the cash discount under the conditions in (b)? Only enter either Yes or No. (f) Blank #6: Should Guizhou Falls borrow the required amount and realize the cash discount under conditions in (d)? Only enter either Yes or No

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

The Power Of Accounting What The Numbers Mean And How To Use Them

Authors: Lawrence Lewis

1st Edition

0415884306, 978-0415884303

More Books

Students also viewed these Accounting questions

Question

2. Avoid controlling language, should, must, have to.

Answered: 1 week ago

Question

What are the general types of interviews? Explain each.

Answered: 1 week ago

Question

6 How can HRM contribute to ethical management and sustainability?

Answered: 1 week ago