Question

Lancaster Lumber buys $8 million of materials (net of discounts)
on terms of 3/5, net 60, and it currently pays on the
5^{th} day and takes discounts. Lancaster plans to expand,
which will require additional financing. Assume 365 days in year
for your calculations.

If Lancaster decides to forgo discounts, how much additional
credit could it obtain? Write out your answer completely. For
example, 5 million should be entered as 5,000,000. Do not round
intermediate calculations. Round your answer to the nearest
cent.

$

What would be the nominal cost of that credit? Do not round
intermediate calculations. Round your answer to two decimal
places.

%

What would be the effective cost of that credit? Do not round
intermediate calculations. Round your answer to two decimal
places.

%

If the company could get the funds from a bank at a rate of 7%,
interest paid monthly, based on a 365-day year, what would be the
effective cost of the bank loan? Do not round intermediate
calculations. Round your answer to two decimal places.

%

Should Lancaster use bank debt or additional trade credit?

Answer #1

Lancaster Lumber buys $8 million of materials (net of discounts)
on terms of 3/5, net 80; and it currently pays on the 5th day and
takes discounts. Lancaster plans to expand, which will require
additional financing. Assume 365 days in year for your
calculations.
a. If Lancaster decides to forgo discounts, how much additional
credit could it obtain? Write out your answer completely. For
example, 5 million should be entered as 5,000,000. Round your
answer to the nearest cent.
b....

Quantitative Problem: Adams Manufacturing Inc.
buys $10 million of materials (net of discounts) on terms of 2/10,
net 60; and it currently pays after 10 days and takes the
discounts. Adams plans to expand, which will require additional
financing. If Adams decides to forgo discounts, how much additional
credit could it obtain? Round your answer to the nearest cent. Do
not round your intermediate calculations. Use 365 day in a
year.
$
What would be the nominal and effective cost...

Quantitative Problem: Adams Manufacturing Inc. buys $9 million
of materials (net of discounts) on terms of 2/10, net 50; and it
currently pays after 10 days and takes the discounts. Adams plans
to expand, which will require additional financing. If Adams
decides to forgo discounts, how much additional credit could it
obtain? Round your answer to the nearest cent. Do not round your
intermediate calculations. Use 365 day in a year. $ What would be
the nominal and effective cost...

Quantitative Problem: Adams Manufacturing Inc. buys $8.1 million
of materials (net of discounts) on terms of 2/10, net 50; and it
currently pays after 10 days and takes the discounts. Adams plans
to expand, which will require additional financing. If Adams
decides to forgo discounts, how much additional credit could it
obtain? Round your answer to the nearest cent. Do not round your
intermediate calculations. Use 365 day in a year.
$__
What would be the nominal and effective cost...

1) Adams Manufacturing Inc. buys $11.2 million of materials (net
of discounts) on terms of 2/10, net 50; and it currently pays after
10 days and takes the discounts. Adams plans to expand, which will
require additional financing. If Adams decides to forgo discounts,
how much additional credit could it obtain? Assume 365 days in year
for your calculations. Do not round intermediate calculations.
Round your answer to the nearest cent.
$=?
2) What would be the nominal and effective...

RECEIVABLES INVESTMENT
Leyton Lumber Company has sales of $11 million per year, all on
credit terms calling for payment within 30 days, and its accounts
receivable are $1.98 million. Assume 365 days in year for your
calculations.
A. What is Leyton's DSO? Do not round intermediate
calculations.Round your answer to two decimal places.
days
B. What would DSO be if all customers paid on time? Do not round
intermediate calculations. Round your answer to two decimal
places.
days
C. How...

McEwan Industries sells on terms of 3/10, net 40. Total sales
for the year are $1,870,500; 40% of the customers pay on the
10th day and take discounts, while the other 60% pay, on
average, 82 days after their purchases. Assume 365 days in year for
your calculations.
What is the days sales outstanding? Round your answer to two
decimal places.
What is the average amount of receivables? Round your answer to
the nearest cent. Do not round intermediate
calculations....

McEwan Industries sells on terms of 3/10, net 35. Total sales
for the year are $1,461,000; 40% of the customers pay on the
10th day and take discounts, while the other 60% pay, on
average, 50 days after their purchases. Assume 365 days in year for
your calculations.
What is the days sales outstanding? Round your answer to two
decimal places.
days
What is the average amount of receivables? Round your answer to
the nearest cent. Do not round intermediate...

McEwan Industries sells on terms of 3/10, net 40. Total sales
for the year are $1,775,000; 40% of the customers pay on the
10th day and take discounts, while the other 60% pay, on
average, 52 days after their purchases. Assume 365 days in year for
your calculations.
What is the days sales outstanding? Round your answer to two
decimal places.
days
What is the average amount of receivables? Round your answer to
the nearest cent. Do not round intermediate...

McEwan Industries sells on terms of 3/10, net 25. Total sales
for the year are $746,500; 40% of the customers pay on the
10th day and take discounts, while the other 60% pay, on
average, 52 days after their purchases. Assume 365 days in year for
your calculations.
What is the days sales outstanding? Round your answer to two
decimal places.
days
What is the average amount of receivables? Round your answer to
the nearest cent. Do not round intermediate...

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