QUESTION 4

(20 Marks)

Answer the questions from the information provided.

411 Catulte he prorthaiLotus Suples woult make fine acout eltled witin 10 days.

(7 maks)

4.12 Suor tue bustom ofait day tupieunt due and the account is witten of afer 0 days, how

(3 marks)

INFORMATION

Lotus Suppliers is considering selling a refrigerator to Jane on credit. The cost of the refrigerator is R12 500 and the selling price is R20 000. Credit terms of 2/10 net 60 were agreed upon. The cost of capital to Lotus Suppliers is 15%.

4.2

Use the information given below to calculate the number of orders that need to be placed annually based on the economic order quantity.

(6 marks)

INFORMATION

The annual sales of a product sold by Bellagio Limited is 3 600 000 units. The purchase price is R12 per unit. The carrying cost of inventory amounts to 25% of the purchase price. The ordering cost is R24 per order.

4.3

4.3.1

Calculate the effective interest rate from the information given below if: the interest is paid in advance.

4.3.2 there is a 20% compensating balance requirement.

(3 marks)

Benson Limited plans to borrow R2 000 000 for one year. The stated interest rate is 15%