Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have just purchased some goods and have received a $1,000 invoice. The invoice has credit terms of 2/10 n45. If you pay the

 

You have just purchased some goods and have received a $1,000 invoice. The invoice has credit terms of 2/10 n45. If you pay the invoice on the net day, what is your annualised percentage cost of credit? (a) 2.04% (b) 20.24% (c) 23.45% (d) 27.86% (e) 37.24% Question 16 When compared to a bank overdraft, the annual percentage cost associated with forgoing discounts offered by trade creditors can be costly. Of course, this result depends on the bank overdraft rate, the invoice's credit terms and when the invoice is finally paid. To demonstrate how delaying invoice payment can reduce the cost of credit below the cost of an overdraft, determine the minimum number of days after the net period that one would delay payment on a 2/10 n30 invoice to get the cost of credit below 9.00% p.a. (a) 56 days (b) 66 days (c) 86 days (d) 96 days (e) 106 days

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To calculate the annualized percentage cost of credit we can use the following formula Annualized Pe... 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

Cost Accounting Foundations and Evolutions

Authors: Michael R. Kinney, Cecily A. Raiborn

8th Edition

9781439044612, 1439044619, 978-1111626822

More Books

Students also viewed these Accounting questions

Question

Solve 1. dx dy + x 1-xy=xy.

Answered: 1 week ago

Question

=+c) What were the treatments? Chapter Exercises

Answered: 1 week ago

Question

Briefly describe computer-aided approaches to production.

Answered: 1 week ago

Question

How can a layout help or hinder productivity?

Answered: 1 week ago