Your company has been offered credit terms on its purchases of 4/30, net 90 days. What will be the nominal annual cost of trade credit if your company pays on the 35th day after receiving the invoice? (Assume a 365-day year.) Show your complete solution.

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: Kumi Ltd permits its customers to pay with a credit card or to receive a percentage discount ? for…

A: Given:

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

A: Trade credit is the arrangement by which the customer gets additional time to repay the dues and…

Q: Angela read an advertisement for a P50,000 loan. The ad informs the borrower that the company only…

A: Interest = Principal × Interest rate = 50,000(0.18) = 9000 Interest per annum = 9000

Q: Assume that you start with a balance of $3900 on your credit card.During the first month you charge…

A: Here, Balance on Credit Card is $3900 APR is 29% Charges for first Month is $400 Charges for Second…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Interest rate= Prime rate +4% = 8% + 4%= 12% Interest is calculated for the number of days on…

Q: Kumi Ltd permits its customers to pay with a credit card or to receive a percentage discount x for…

A:

Q: What is the nominal annual percentate cost of the non-free trade credit if it pays within 120 days…

A: Nominal annual % cost of non-free trade credit = [ { Discount / ( 1 - Discount ) } x { 365 / ( Days…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Prime rate The current interest rate charged by the financial institution to its customers is known…

Q: If the total Accounts Receivable of HAPPY ENTERPRISES is 560,000 and gives its customers a 5%…

A: Accounts Receivable means accounts of those customers to whom business has made credit sales on…

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

A: When goods are sold on credit, the seller extends short term finance to the buyer to make the…

Q: Assume that you start with a balance of $4000 on your Visa credit card. During the first month, you…

A: Finance charges are levied by credit card companies if credit card holder fails to make payment on…

Q: A store will give you a 4.00% discount on the cost of your purchase if you pay cash today.…

A: Let's assume the cost of purchase is C. On immediate payment,Discount = 4%Hence, the discounted cost…

Q: Round House Furniture offers credit to its customers at a rate of 1.15 percent per month. What is…

A: Effective rate of interest is the equivalent interest rate which is determined by considering the…

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: To expand the business or operations, firms required funds which can be raised through issuing…

Q: ur customers has just made a purchase in the amount of $28,000. You have agreed to payments of $590…

A: The time period to pay the loan will depends on the interest rate and compounding of loan and…

Q: Assume that you start with a balance of $3600 on your credit card. During the first month, you…

A: Given Starting balance is $3600 First month charge is $400 Second month charge is $550

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Interest rate applicable = Prime rate + premium Interest will be charge when the line of credit…

Q: Howes Inc. buys on terms of 2/15, net 50 days. It does not take discounts, and it typically pays on…

A: Costly Trade credit= Total credit - free trade credit Purchase daily = Total purchase / number of…

Q: What will be the simple commercial discount that would have a document whose face value is $ 7,200…

A: The formula to calculate Simple Discount is  SD=Mrt where  SD= Simple discount M= face value r=Rate…

Q: A store will give you a 1.75% discount on the cost of your purchase if you pay cash today.…

A: The concept of the time value of money states that the same amount of money is worth more today than…

Q: Assume you have a balance of $1000 on a credit card with an APR of 24%, or 2% per month You start…

A: By using credit cards, people usually spend more money and people who actually pay their credit…

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: An automobile dealership offers a car with $0 down payment, $0 first month's payment, and $0 due at…

A: The negotiated sales price is the present value of future payments. It is the discounted value of…

Q: Assume you have a balance of $1200 on a credit card with an APR of 24%, or 2% per month. You start…

A:

Q: what is the annual interest rate cost (Use 360-day year)?

A: If the firm foregoes the cash discount offered then they would be paying higher for the goods. This…

Q: A firm purchased heavy cable and 4 inch conduit on credit and agreed to pay 10% interest rate per…

A: Given Purchase made in Oct = $756.80 Purchase made in Dec = $1,325.25 I

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Interest rate will be equal to addition of current prime rate plus annual percentage rate. = 8% + 4%…

Q: Dome Metals has credit sales of $522.000 yearly If Dome offers a 2 percent discount for payment in…

A: Accounts receivables of a company are the receivables which a company will receive from the…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Annual percentage rate is the effective rate of interest at which cash flows are converted into an…

Q: At the beginning of a month, a customer owes a credit card company $8480. In the middle of the…

A: A credit card allows the holder to spend for their needs and allows them to pay at a later date…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Line of credit (LOC) can be defined as the prespecified of money that can be borrowed from a lender…

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: Suppose you deposit D dollars at the beginning of each month into an account that pays a monthly…

A: Given: B = $2,600 D = $160 r = 0.005 B = D(1+r)[ (1+r)t -1]/r.

Q: Hail & Sons operates for 240 days in a year. It has been offered credit terms of 4/30, net 90 days.…

A: Credit term refers to a method used by the firms to encourage buyer or debtor to pay the amount of…

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: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Loan is a value which is borrowed from the sources like bank and amount repaid later with and extra…

Q: Cook Security Systems has a $37,500 line of credit, which charges an annual percentage rate of prime…

A: Interest on Line of credit is based on the opening balance of the period before the balance is…

Q: Ammer Products has an average accounts payable balance of P850,000 and its annual net credit…

A: Accounts payable in the business means accounts of those suppliers from whom business has made…

Q: Bulldogs Inc. is given terms of 2/10, net 45 by its suppliers. If Bulldogs Inc. forgoes the cash…

A: Cash discount if paid within 10 days= 2%

Q: A. DEF has total forecasted gross purchases of P4,500,000 relating to a major supplier for the…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: cool security systems has $37,500 line of credit , which charges an annual percentage rate of prime…

A: The closing balance can be calculated as follows :

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.