a. What is the total amount of cash discounts allowed in a year? (Enter your answer in millions rounded to 2 decimal places.) b. Calculate the approximate annual rate of return on investment that Nadak Co.’s cash discount terms represent to customers who take the discount. (Assume a credit period of 30 days and 360-days year). (Round intermediate calculations to 2 decimal places. Enter your answer as a p
a. What is the total amount of cash discounts allowed in a year? (Enter your answer in millions rounded to 2 decimal places.) b. Calculate the approximate annual rate of return on investment that Nadak Co.’s cash discount terms represent to customers who take the discount. (Assume a credit period of 30 days and 360-days year). (Round intermediate calculations to 2 decimal places. Enter your answer as a p
Chapter15: Managing Short-term Assets
Section: Chapter Questions
Problem 11PROB
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Exercise 5-13 (Algo) Cash discounts—ROI LO 5
Annual credit sales of Nadak Co. total $363 million. The firm gives a 2.75% cash discount for payment within 10 days of the invoice date; 80% of Nadak's accounts receivable are paid within the discount period.
Required:
a. What is the total amount of cash discounts allowed in a year? (Enter your answer in millions rounded to 2 decimal places.)
b. Calculate the approximate annual rate of
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