Mavericks Cosmetics buys $4,691,301 of product (net of discounts) on terms of 7/10, net 60, and it currently pays on the 10th day and takes discounts.  Mavericks plans to expand, and this will require additional financing.  If Mavericks decides to forego discounts, what would the effective percentage cost of its trade credit be, based on a 365-day year?

Q: A retailer owes a wholesaler $700,000 due in 45 days. If the payment is 15 days late, there is a 1%…

A: Part (a): Calculation of interest amount: Answer: 45 day certificate interest is $7,000 65 day…

Q: 7. Howes Inc. purchases $4,562,500 in goods per year from its sole supplier on terms of 2/15, net…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: On average, how much “free” trade credit does the firm receive during the year?

A: Free trade credit refers to the payment made by a firm within the discount period whereas when the…

Q: A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and…

A: The effective annual cost of not taking trade cash discount is computed as follows: - Effective…

Q: Your company has been offered credit terms on its purchases of 4/30, net 90 days. What will be the…

A: The an agreement to purchase products and/or services on credit rather than making immediate cash or…

Q: ABC is deciding to give a cash discount of 1% if the customers pay on the tenth day. It originally…

A: Cash discounts should not be considered as financial profits when making transactions. Profits…

Q: Rose Company currently uses maximum trade credit by not taking discounts on its purchases. The…

A: Trade credit is offered to the customers in order to encourage them for the early cash payment. Some…

Q: Fil Development buys on terms of 2/15, net 60 days. It does not take discounts, and it typically…

A: Accounts payables are the liabilities which arises due to credit purchases from the suppliers. The…

Q: Company X sells on a 2/10, net 90, basis. Company Y buys goods with an invoice of $1,500.   a. How…

A: Given values: Invoice value = $ 1500 if paid within 10 days discount = 2% with in 90 days it should…

Q: PPG Co. buys on terms of 2/15, net 30 days. It does not take discounts, and it typically pays 30…

A: Credit financing is a type of financing in which a purchase is made on credit, that is, the purchase…

Q: Microsoft corporation wants to reduce its interest rate exposure and will need to borrow $1,000,000…

A: FRA: It is an OTC contract between the two parties in which an interest rate is paid at a…

Q: HBC Inc. buys on terms of 2/10, net 30 days. It does not take discounts, and it typically pays 30…

A: The question is related to the Free trade Credit. The details are given.  First we will calculate…

Q: Haumea has been offered credit terms of discount of four percent if paid within thirty days, if not…

A: Workings: Nominal annual percentage cost of its non-free trade credit=Discount rate100-Discount…

Q: A company buys on terms of 2/15, net 30 days. It does not take discounts, and it typically pays 35…

A: Nominal Annual Cost = Discount percent(100-Discount percent) × 365 daysTotal Pay period - Discount…

Q: Mavericks Cosmetics buys $4,691,301 of product (net of discounts) on terms of 7/10, net 60, and it…

A: Effective percentage cost of trade credit considers the compounding effect. Following is the formula…

Q: A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and…

A: The question is related to cost of trade. The details are given.

Q: The company sells products to a customer for $70,000 and will receive $10,000 at the end of each of…

A: Present value means value of cash flow that arise in future , by applying specific discounting…

Q: Breeze Corp. is planning to change its credit terms from 4/10, n/30 to 5/15, n/35. Currently, 50% of…

A: Days sales outstanding refer to average number of days that an organisation or a company takes to…

Q: Rose Company currently uses maximum trade credit by not taking discounts on its purchases. The…

A: Given, Net purchases per day are P11,760 Interest rate is 10% Discount rate is 2%

Q: AL Enterprises purchases P4,562,500 in goods per year from its sole supplier on terms of 2/15, net…

A: Discount rate = 0.02 (i.e. 2%) Allowed payment days = 50 Discount days = 15

Q: FP Co. buys on terms 2/10, net 30, but generally does not pay until the 40 days after invoice date.…

A: FP Co. buys on terms 2/10, net 30, but generally does not pay until the 40 days after invoice date.…

Q: if Jayne company gets a discount loan at a 12 percent interest rate.  They borrow $100,000 for one…

A: Since you have asked multiple questions, we will solve only one( i will be solving the 2nd question…

Q: Kirk Development buys on terms of 2/15, net 60 days.  It does not take discounts, and it typically…

A: The calculation is:

Q: Bulldogs Inc. enters into an agreement with a firm that will factor the company's accounts…

A: The correct answer for the above mentioned question is given in the following steps.

Q: Peanut Inc. is evaluating whether to change its credit terms from 2/10 net 30 to 3/10 net 30. At…

A: Account receivables (AR) is current assets (CA) for the firm. To make effective collections and…

Q: %, collections within the discount period is 40% and the average age will be 22 days. The variable…

A: The costs decline significantly with experience due to the learning curve phenomenon and efficiency.…

Q: Charm Company sells 1,000 units of radio sets at P9,000 each for cash. Each radio set is under…

A: Total estimated warranty expense = Sales units x 60% x warranty cost per unit = 1000 units x 60% x…

Q: Microsoft corporation wants to reduce its interest rate exposure and will need to borrow $1,000,000…

A: Forward rate agreement: It is an agreement between the parties in which the rate of return is…

Q: On february 5, 2018, nicanor merchandising has purchased goods on account amounting to 500,000 with…

A: 3. If Nicanor do not pays within discount period then discount will not given to Nicanor Discount=…

Q: If a firm buys under terms of 1/15, net 60, but actually pays on the 20th day and still takes the…

A: If a customer pays the amounts due on his purchase within a certain time period, he may receive a…

Q: Newsome inc. buys on terms of 3/15, net 45. It does not take the discount, and it generally pays…

A: Financial Management: Financial management comprises of two words i.e. Finance and management.…

Q: A retailer owes a wholesaler $900,000 due in 45 days. If the payment is 15 days late, there is a 1%…

A: Concept. Certificate of deposit is money market instrument which is issued in dematerialized form…

Q: Hinkle Corporation buys on terms of 2/15, net 60 days. It does not take discounts, and it typically…

A: The process by which financial transactions of the business are recorded and communicated with the…

Q: nider Industries sells on terms of 2/10, net 25. Total sales for the year are $600,000. Thirty…

A: Days Sales Outstanding means the number of days taken by the firm to collect the payment from their…

Q: nider Industries sells on terms of 2/10, net 35. Total sales for the year are $600,000. Thirty…

A: Days sales outstanding means the average number of days , a customer take , to make payment. This…

Q: Black Panther Inc. buys on terms of 2/15, net 60 days. It does not take discounts, and it typically…

A: Net purchases = P450,000 Terms of credit = 2/15,net 60 days

Q: Fil Development buys on terms of 2/15, net 60 days. It does not take discounts, and it typically…

A: Accounts payable: Accounts payable are the liabilities which arises due to credit purchases from the…

Q: BayFish Company currently uses maximum trade credit by not taking discounts on its purchases.…

A: If the firm plans to use trade discount. Then firm should borrow notes. $10000 per day borrow. And…

Q: what is the annual cost of financing? a. 12% b. 17.5% c. 10% d. 14%

A: Solution:- Given, A Company enters into an agreement with a firm that will factor the company's…

Q: HBC Inc. buys on terms of 2/10, net 30 days. It does not take discounts, and it typically pays 30…

A: Trade Discount: Providing a trade discount is a good approach to capture a customer's attention by…

Q: Calla Lily Corp. purchases on terms of 2/8, net 45 days, does not accept discounts, and pays after…

A: Time = 45 days Terms = 2/8 Pay after A = 58 days Year y = 365 days

Q: A firm is offered trade credit terms of 3/15, net 45 days. The firm does not take the discount, and…

A: Nominal Annual Cost = Discount percent(100-Discount percent) × 365 daysTotal Pay period - Discount…

Q: Black Panther Inc. buys on terms of 2/15, net 60 days. It does not take discounts, and it typically…

A: Credit terms indicate the percentage discount a firm can take off the invoice amount if payments…

Q: Company X sells on a 2/15, net 90, basis. Company Y buys goods with an invoice of $1,000.   a. How…

A: Credit sale term =2/15, net 90 Company Y buys goods of =$1000 Meaning of 2/15, net 90: It means if…