Problem 16-09 (Cost of Trade Credit) Question 5 of 7 ▸ Check My Work Cost of Trade Credit Grunewald Industries sells on terms of 3/10, net 40. Gross sales last year were $4,124,500 and accounts receivable averaged $423,750. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers? (Hint: Calculate daily sales based on a 365-day year, calculate the average receivables for discount customers, and then find the DSO for the nondiscount customers.) Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: % Effective cost of trade credit: %
Problem 16-09 (Cost of Trade Credit) Question 5 of 7 ▸ Check My Work Cost of Trade Credit Grunewald Industries sells on terms of 3/10, net 40. Gross sales last year were $4,124,500 and accounts receivable averaged $423,750. Half of Grunewald's customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers? (Hint: Calculate daily sales based on a 365-day year, calculate the average receivables for discount customers, and then find the DSO for the nondiscount customers.) Do not round intermediate calculations. Round your answers to two decimal places. Nominal cost of trade credit: % Effective cost of trade credit: %
Chapter15: Managing Short-term Assets
Section: Chapter Questions
Problem 11PROB
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Transcribed Image Text:Problem 16-09 (Cost of Trade Credit)
Question 5 of 7 ▸
Check My Work
Cost of Trade Credit
Grunewald Industries sells on terms of 3/10, net 40. Gross sales last year were $4,124,500 and accounts receivable averaged $423,750. Half of Grunewald's
customers paid on the 10th day and took discounts. What are the nominal and effective costs of trade credit to Grunewald's nondiscount customers? (Hint: Calculate
daily sales based on a 365-day year, calculate the average receivables for discount customers, and then find the DSO for the nondiscount customers.) Do not round
intermediate calculations. Round your answers to two decimal places.
Nominal cost of trade credit:
%
Effective cost of trade credit:
%
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