You place an order for 250 units of inventory at a price of $130 per unit. The supplier offers terms of 1/10 net 30. a) How long do you have to pay before the account is overdue? If you take the full period to pay, how much should you remit? b) What is the discount being offered, in percentage terms? How quickly must you pay, in days, to get the discount? If you do take the discount, how much should you remit? c) If you don't take the discount, how much interest are you paying implicitly, in dollars? How may days' credit are you effectively receiving?

You place an order for 250 units of inventory at a price of $130 per unit. The supplier offers terms of 1/10 net 30. a) How long do you have to pay before the account is overdue? If you take the full period to pay, how much should you remit? b) What is the discount being offered, in percentage terms? How quickly must you pay, in days, to get the discount? If you do take the discount, how much should you remit? c) If you don't take the discount, how much interest are you paying implicitly, in dollars? How may days' credit are you effectively receiving?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 5P: A chain of appliance stores, APP Corporation, purchases inventory with a net price of 500,000 each...

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