副本Exercise 6-9

副本Exercise 6-9...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Exercise 6-9 This is the first of nine tabs in this file. These tabs contain information to explain how to compare the 1% credit term discount to the 16% bank loan to determine which is more favorable. The solution is done three ways. You need to master one of the three ways. Method 1: Total cost (2 tabs) Method 2: Compare annual interest rates (1 tab) Method 3: Compare 20 days' interest (3 tabs) Introduction to the text book exercise Inventory purchased from John's Fisheries: $1,000 Credit terms : 2/10, n/30 Bank interest rate: 16% Is it cheaper to pay John's Fisheries $1,000 on the due date or to borrow money from the bank and pay John's Fisheries within the discount period?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Legend for time line codes: ID: Invoice date LD: Loan date FP: Final payment (pay invoice amount to John's Fisheries or pay bank if money was borrowed) ID LD FP 0 10 30 days The terms of 1/10, n/30 mean 1% discount will be applied if the Korean restaurant pays John's Fisheries within 10 days of the invoice. In order to pay within the discount period, the restaurant must borrow cash from the bank. Your task is to determine if it is cheaper to pay when due in 30 days (no discount) or
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/02/2011 for the course ENG 110 taught by Professor Rucker during the Spring '08 term at Missouri State University-Springfield.

Page1 / 9

副本Exercise 6-9...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online