Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN: 9781337395083
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 23, Problem 8MC
Summary Introduction
Case summary:
Person A the
She planned to use an example of Company’s “big ticket” items which is a customized computer microchip used in the company’s laptop. She planned to start the discussion by explaining some basic inventory concept. She asked person X to help her by way of answering the questions.
Characters in the case:
Person A- Financial manager of Company W
Person FW- CEO of the company
Person X-Assistant of person A
To determine: Whether Company W should take the discount.
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Students have asked these similar questions
A specific model of computer servers are being sold by Company A for $26,700 each,
offering trade discounts of 8% and 6% and by Company B for $35,500 each, offering
trade discount rates of 13% and 3%.
a. Which company offers the servers for a cheaper price?
O A
o B
b. What further trade discount rate must the company with the higher price provide to
match the lower price?
%
You place an order for 1,100 units of Good X at a unit price of $48. The supplier offers terms of 3/30, net 40.
How quickly must you pay to get the discount?
b-3.
If you do take the discount, how much should you remit? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
c-1.
If you don’t take the discount, how much interest are you paying implicitly? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
You place an order for 1,500 units of Good X at a unit price of $52. The supplier offers
terms of 1/25, net 40.
How long do you have to pay before the account is overdue? If you take the full period,
how much should you remit. What is the discount being offered? how quickly must you
pay to get the discount? If you do take the discount, how much should you remit? if you
don't take the discount, how much interest are you paying implicitly? How many day's
credit are you receiving?
Chapter 23 Solutions
Intermediate Financial Management (MindTap Course List)
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
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- You place an order terms of 2/25, net 45. 000 units of Good X at a unit price of $47. The supplier offers a-1. How long do you have to pay before the account is overdue? a-2. If you take the full period, how much should you remit? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b-1. What is the discount being offered? (Enter your answer as a percent.) b-2. How quickly must you pay to get the discount? b-3. If you do take the discount, how much should you remit? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c-1. If you don't take the discount, how much interest are you paying implicitly? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) c-2. How many days' credit are you receiving? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)arrow_forwardABC company offers an item for RM 300 less 20% whilst XYZ company offers the same item for RM 320 less 40%. Find i. the net prices of the item offered by the two shops. ii. the further discount percentage that must be offered by the shop that sells at a higher net price in order to meet the competitor’s price.arrow_forwardA merchant has an annual demand for a product of 500 items. He buys from a supplier at a cost of $5 per item and the cost of ordering is $10 per order. The inventory holding costs are 20% p. a. of stock value. If the supplier offers a 5% discount on orders of between 400 and 799 items, and a 10% discount on orders of 800 or more. Can the merchant reduce his costs by taking advantage of either of these discounts?arrow_forward
- Assuming that for any orders of at least 1800 units the firm will get 5% discount on the purchase price. Analyze whether the company should take advantage of the discount or notarrow_forwardbuying and sellingABC Company offers to fill an order for goods at P 25,800.00 less 25% and 25 %, terms n/30. On the other hand, XYZ Corporation offers P 25,000.00 less 35%, 3%, and 2%, terms 8/10, n/30: on the same order. Assuming that Mr Cruz will pay cash, which is the better offer?arrow_forward# You can buy a product from one of three companies. Company A for $3,200 with a trade discount of 30%, Company B for $2,900 with a trade discount of 20% and 10%, or Company C for $3,450 with a trade discount of 20%, 15%, 5%. Which company has the lowest net price?arrow_forward
- Assume all suppliers to a large retail chain offer credit terms of 2/10, net 30. The retail chain consistently takes the 2 percent discount and pays in 60 days. When pressed on the issue, the retail chain tells the suppliers they can either accept the payments as they currently are or lose the business. Is this ethical? How might this impact a small supplier versus a large supplier? Explain.arrow_forwardcompany 1 sells a product for $24.30 with trade discount rates of 7% and 3%. company 2 sells the same product for $22.30 with two trade discount rates of 7% and 5%. a. Which company is offering it for a cheaper price? The company 1 The company 2 b. What further trade discount rate must the company with the higher price provide to match the lower price?arrow_forwardRefer to the data in Required 6. Assume the outside supplier will accept an order of any size for the tubes at a price of $1.90 per box. How many boxes of tubes should Silven make? How many boxes of tubes should it buy from the outside supplier?arrow_forward
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