View the step-by-step solution to:

Finance unlimited is examining three possible funding methods for current assets. Details follow: Stretch payables: Supplier terms: 2/10 Net 30...

Finance unlimited is examining three possible funding methods for current assets. Details follow:

Stretch payables: Supplier terms: 2/10 Net 30

                                 Finance U. currently pays within the discount period

                                 Finance U. is considering stretching 20 days to end of net period

Line of credit: Loan Terms: 2.5% per month

                          A 3% compensating balance must be maintained by the bank

Factoring receivables: Sell receivables to a factor at a 2.5% discount

                                         Invoice terms are 1/20 Net 30

                                         30% of customer take the discount

                                        The remainder pay on day 35

 

By stretching payables and losing a discount, the firm is paying a finance charge of what?

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question