FUND OF CORPORATE FINANCE LL W/ACCESS
11th Edition
ISBN: 9781260076752
Author: Ross
Publisher: MCG
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Chapter 20, Problem 1QP
(a)
Summary Introduction
To determine: The remittance for full period.
Introduction:
Cash discount is a part of company’s terms of sale on credit. To get this advantage of the cash discount, some customers will pay early.
(b)
Summary Introduction
To determine: The remittance for discount period.
(c)
Summary Introduction
To determine: The number of days’ credit offered.
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Students have asked these similar questions
3.- The Company Surteco sells 10.000 units of their wrapped moluldings for 1.5€/unit, per year.
They are offering 3/10, n30, and the discount is taken by 40% of the customers.
What is the total value of the Accounts receivable?
In order to gain market share against Lamidecor, their competitor, they are thinking about offering 4/5,n45.
What is now the new value for accounts receivable if the % of discount taken is still 40%?
Current credit policy
proposed credit policy
Cash price
$48.00
$48.00
Credit price
n/a
$50.00
Variable cost
$36.00
$36.00
Quantity
120
120
Monthly return
2.00%
2.00%
Credit terms
n/a
Net 30
% Uncollectable
n/a
3.00%
Assume the customer will either pay in 30 days or will default.
What is the cost of switching the credit policy?
A) $ 6,000
B) $ 4,320
C) $ 5,333
D) $ 5,000
E) $ 5,760
Q3) Discount
Sales = $24m
Credit Terms = 2/10, net/30
Borrowing rate = 17%
30% customers will avail discount and 70% will not avail. Is this a viable proposition?
Chapter 20 Solutions
FUND OF CORPORATE FINANCE LL W/ACCESS
Ch. 20.1 - Prob. 20.1ACQCh. 20.1 - Prob. 20.1BCQCh. 20.2 - What considerations enter into the determination...Ch. 20.2 - Explain what terms of 3/45, net 90 mean. What is...Ch. 20.3 - Prob. 20.3ACQCh. 20.3 - Explain how to estimate the NPV of a credit policy...Ch. 20.4 - What are the carrying costs of granting credit?Ch. 20.4 - What are the opportunity costs of not granting...Ch. 20.4 - Prob. 20.4CCQCh. 20.5 - Prob. 20.5ACQ
Ch. 20.5 - Prob. 20.5BCQCh. 20.6 - Prob. 20.6ACQCh. 20.6 - What is an aging schedule?Ch. 20.7 - What are the different types of inventory?Ch. 20.7 - What are three things to remember when examining...Ch. 20.7 - Prob. 20.7CCQCh. 20.8 - Prob. 20.8ACQCh. 20.8 - Which cost component of the EOQ model does JIT...Ch. 20.A - Prob. 1ACQCh. 20.A - Prob. 1BCQCh. 20.A - Evaluating Credit Policy [LO2] Bismark Co. is in...Ch. 20.A - Credit Policy Evaluation [LO2] The Johnson Company...Ch. 20.A - Prob. 3QPCh. 20.A - Prob. 4QPCh. 20.A - Prob. 5QPCh. 20 - What is the difference between the accounts...Ch. 20 - Prob. 20.2CTFCh. 20 - Prob. 20.7CTFCh. 20 - Prob. 1CRCTCh. 20 - Prob. 2CRCTCh. 20 - Prob. 3CRCTCh. 20 - Five Cs of Credit [LO1] What are the five Cs of...Ch. 20 - Prob. 5CRCTCh. 20 - Prob. 6CRCTCh. 20 - Prob. 7CRCTCh. 20 - Prob. 8CRCTCh. 20 - Prob. 9CRCTCh. 20 - Prob. 10CRCTCh. 20 - Prob. 1QPCh. 20 - Size of Accounts Receivable [LO1] The Red Zeppelin...Ch. 20 - Prob. 3QPCh. 20 - Prob. 4QPCh. 20 - Terms of Sale [LO1] A firm offers terms of 1/10,...Ch. 20 - Prob. 6QPCh. 20 - Prob. 7QPCh. 20 - Prob. 8QPCh. 20 - Evaluating Credit Policy [LO2] Air Spares is a...Ch. 20 - Prob. 10QPCh. 20 - Prob. 11QPCh. 20 - Prob. 12QPCh. 20 - Prob. 13QPCh. 20 - Prob. 14QPCh. 20 - Prob. 15QPCh. 20 - Prob. 16QPCh. 20 - Prob. 17QPCh. 20 - Prob. 18QPCh. 20 - Prob. 19QPCh. 20 - Prob. 20QPCh. 20 - Prob. 21QPCh. 20 - Prob. 22QPCh. 20 - Credit Policy at Howlett Industries Sterling...Ch. 20 - Prob. 2M
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