{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Determine the cost of giving up cash discounts

# Determine the cost of giving up cash discounts - 100 2 45...

This preview shows page 1. Sign up to view the full content.

Determine the cost of giving up cash discounts under each of the following terms of sale. Cost of giving up discount % discount days in a year = -------------------------- X ------------------------------------------- (100 - % discount) (payment date – discounted period (a) 2/10 net 30 2 365 = ----------- X ------------ = ( 2 / 98 )( 365 / 20 ) = 0.3724 or 37.24% 100 – 2 30 – 10 (b) 1/10 net 30 1 365 = ----------- X ------------ = ( 1 / 99 )( 365 / 20 ) = 0.1843 or 18.43% 100 – 1 30 – 10 (c) 2/10 net 45 2 365 = ----------- X ------------ = ( 2 / 98 )( 365 / 35 ) = 0.2128 or 21.28%
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 100 2 45 10 (d) 3/10 net 45 3 365 = ----------- X ------------ = ( 3 / 97 )( 365 / 35 ) = 0.3225 or 32.25% 100 3 45 10 (e) 1/10 net 60 1 365 = ----------- X ------------ = ( 1 / 99 )( 365 / 50 ) = 0.0737 or 7.37% 100 1 60 10 (f) 3/10 net 30 3 365 = ----------- X ------------ = ( 3 / 97 )( 365 / 20 ) = 0.5644 or 56.44% 100 3 30 10 (g) 4/10 net 180 4 365 = ----------- X ------------ = ( 4 / 96 )( 365 / 170 ) = 0.089 or 8.9% 100 4 180 10...
View Full Document

{[ snackBarMessage ]}