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Assume that interest is calculated based on the debt outstanding at the beginning of the year. However, after you finish your forecast, can you please
Assume that interest is calculated based on the debt outstanding at the beginning of the year. However, after you finish your forecast, can you please tell me what would happen to the amount of financing we require if we calculated the interest based on average debt during the year, and why? 2) Our ice cream parlors will require 2,000,000 buckets of ice cream for 2023. We will keep the $20 price per bucket the same for transfer pricing purposes. 3) Please calculate A/P based on days in purchases. Recall that Purchases = Cost of Sales + Ending Inventory - Beginning Inventory. 4) The long-term debt has scheduled payments of $1,000,000 per year. 5) Line of Credit: The ice cream factory will obtain a new line of credit from the bank. The bank will charge an annual interest rate of 10%. Additionally, a covenant will be imposed that sets the maximum balance of the line of credit to 50% of inventory.
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impact of Average Daily Balance vs Beginning Balance on Interest Calculations 1 Impact on Financing Needs Current Method Interest is calculated on the ...
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