Principles of Corporate Finance
13th Edition
ISBN: 9781260465099
Author: BREALEY, Richard
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 30, Problem 13PS
Summary Introduction
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7. A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days.
What is the effective annual cost of not taking this discount? (Assume a 365-day year.)
A. 30.00%
B. 32.25%
C. 37.39%
E. 45.50%
D. 44.30%
8. AMA Computers needs to borrow $800,000 from the Midland Bank. The bank requires a 15% compensating
balance. How much money will Analog need to borrow in order to end up with P800,000 spendable cash?
A. P920,000
C. P1,058,264
D. none of these
B. P941,177
9. DMT Farms harvests crops in roughly 90-day cycles based on a 360-day year. The firm receives payment from its
harvests sometime after shipment. Due in part to the firm's rapid growth, it has been borrowing to finance its harvests
using 90-day bank notes on which the firm pays 12% discount interest. If the firm requires P60,000 in proceeds from
each note, what must be the face value of each note?
A. P60,000
C. P67,423
E. P68,182
Finals Quiz 2- AE 122 (W.
B. P61,856
D.…
CA Inc. assumes new customers will default 15 percent of the time but if they don't default, they will become repeat customers who always pay their bills. Assume the average sale is $500 with a variable cost of $350, and a monthly required return of 1.75 percent. What is the NPV of extending credit for one month to a new customer? Assume 30 days per month.
A firm is offered trade credit terms of 3/15, net 30 days. The firm does not
take the discount, and it pays after 50 days. What is the effective annual
cost of not taking this discount? (Assume a 365-day year.) *
37.39%
44.30%
45.50%
30.00%
32.25%
Chapter 30 Solutions
Principles of Corporate Finance
Ch. 30 - Prob. 1PSCh. 30 - Components of working capital True or false? a....Ch. 30 - Inventory True or false? a. Just-in-time inventory...Ch. 30 - Inventory What are the trade-offs involved in the...Ch. 30 - Prob. 5PSCh. 30 - Prob. 6PSCh. 30 - Prob. 7PSCh. 30 - Prob. 8PSCh. 30 - Prob. 9PSCh. 30 - Credit terms Phoenix Lambert currently sells its...
Ch. 30 - Prob. 11PSCh. 30 - Prob. 12PSCh. 30 - Prob. 13PSCh. 30 - Prob. 14PSCh. 30 - Prob. 15PSCh. 30 - Credit policy How should your willingness to grant...Ch. 30 - Prob. 17PSCh. 30 - Prob. 18PSCh. 30 - Prob. 19PSCh. 30 - Prob. 20PSCh. 30 - Cash management Complete the passage that follows...Ch. 30 - Prob. 22PSCh. 30 - Prob. 23PSCh. 30 - Prob. 24PSCh. 30 - Prob. 25PSCh. 30 - Prob. 26PSCh. 30 - Prob. 27PSCh. 30 - Prob. 28PSCh. 30 - Prob. 29PSCh. 30 - Prob. 30PSCh. 30 - Prob. 31PSCh. 30 - Prob. 32PSCh. 30 - Prob. 34PSCh. 30 - Prob. 35PSCh. 30 - Prob. 36PSCh. 30 - After-tax yields Suppose you are a wealthy...Ch. 30 - Prob. 38PSCh. 30 - Prob. 39PS
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