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Question
Submitted by ht on Mon, 2012-05-07 01:51
due on Fri, 2012-05-11 01:53
answered 1 time(s)
ht is willing to pay $5.00
ht bought 2 out of 4 answered question(s)

4. You run an upscale, fashionable, boutique for pet lovers in Beverly Hills. You need to replenish your inventory with...

4. You run an upscale, fashionable, boutique for pet lovers in Beverly Hills. You need to replenish your inventory with 100 Gucci-brand, jewel encrusted, fleece lined, snakeskin collars for pet iguanas. Your customers have been very late in paying you and therefore your cash flow situation is not very good right now. Basically, you are barely getting by. Your vendor offers the following terms for your inventory purchase: 2/7 net 40. (A) Explain what “2/7 net 40” means. (B) Calculate the interest rate implied by these terms if you do NOT take advantage of the early pay discount and were going to avail yourself of vendor financing. Calculate your answer to 2 decimal places. (C) If you didn’t have the cash to pay early and take the discount but you could take a cash advance from your credit card at 16.9% APR, should you take the temporary cash advance so that you could take the vendor discount? Explain what you should do and why. Assume a 360-day year. You must show your calculations to receive credit.

Answer
Submitted by shahimermaid on Mon, 2012-05-07 12:41
teacher rated 387 times
4.322995
purchased one time
price: $2.00

the answer is explained in the simplest way

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(A

2/7 net xx - xxxx xxxxx the buyer must pay xxxxxx xx xxxx xx the xxxxxxx xxxxx xxx will xxxxxxx a xx discount if xxxx xxx within x days xx xxx invoice xxxxx

xxx

xxxxx credit beyond xxx xxxx discount period xxx a xxxx x {( Discount/1-discount) x xxxx xxxxx credit period- xxxxxxxx period)} the xxxxxxxx xxxxxxxx xxxxx cost x {(0.02/1-0.02) x 360 (40-7)= xxxxxx

xxx

xxxx xxx xxxx should xxxx xxx xxxx xxxx xxx xxxxxx card company and take xxx discount as is evident, xxx xxxxxxxx rate implied is more xxxx the cost xx xxxxxx card company.


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