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Question
Submitted by ht on Mon, 2012-05-07 00:51
due on Fri, 2012-05-11 00:53
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 11:41
teacher rated 380 times
4.33684
purchased one time
price: $2.00

the answer is explained in the simplest way

body preview (95 words)

xx
2/7 net xx x this xxxxx xxx xxxxx xxxx pay xxxxxx xx days of the invoice date, but xxxx receive a 2% discount xx xxxx xxx within x xxxx of xxx invoice xxxxx
xxx
xxxxx xxxxxx xxxxxx the xxxx discount xxxxxx has a cost x {( Discount/1-discount) x xxxx days/ credit period- discount xxxxxxxx xxx xxxxxxxx xxxxxxxx rate/ xxxx = xxxxxxxxxxxxxx x xxx (40-7)= 22.25%
(C)
xxxx xxx xxxx xxxxxx take xxx xxxx from xxx credit xxxx company and xxxx the xxxxxxxx xx is evident, xxx interest xxxx xxxxxxx xx more than the xxxx xx xxxxxx card xxxxxxxx


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