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Financial Statement Impact Emory, Inc. will begin a new sales discount policy on June 1. The new policy provides credit terms of 1/10 net 60
Financial Statement Impact Emory, Inc. will begin a new sales discount policy on June 1. The new policy provides credit terms of 1/10 net 60 for all credit sales. The prior credit terms were net 60. MyPlace Inc. is a customer of Emory, Inc. and wishes to evaluate the potential savings from taking the discount. A slider is provided for the estimated June purchases from Emory, Inc., as follows A second slider provides an interest rate assuming MyPlace borrowed money to make the payment within the discount period $40,000 $60,000 $80,000 Estimated purchases 4% 696 8% 10% Interest rate Use the estimated purchase and interest rate sliders to determine the net savings (cost) as calculated below Discount of 1% on purchases Interest for 50 days Savings (costfom taking discount Answer the following questions using the estimated purchases and interest rate sliders for the savings (cost) calculation. 1. If the estimated purchases are $60,000 and the interest rate is 6%, what is the estimated savings (cost)? 2. What combination of estimated purchases and interest rate produces the largest savings
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