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If a firm's credit terms require payment within 45 days but allow a discount of 2 percent if paid within 15 days (using a 360 day year), the approximate cost/benefit of the trade credit terms is:
\[360 / (45 - 15)\] * \[2% / (100% - 2%)\]
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If a retailer's terms of trade are 3/10, net 45 with a particular supplier, what is the cost on an annual basis of not taking the discount? Assume a 360 day year.
\[360 / (45 - 10)\] * \[3% / (100% - 3%)\]
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A firm purchased $10,000 of merchandise inventory on May 1. The terms of the purchase were 2/10, net 30. The company would pay what amount on May 9?
A 2% discount on $10,000 = a $200 discount. $10,000 - $200 = $9,800.
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If the dollar price of the euro rises, which of the following will occur?
If the dollar price of the euro rises, then the euro is getting more expensive, thus the dollar is getting less expensive.
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One euro will buy US $1.48 and a British pound will buy US $2.06. What is the cross rate of euros per pound?
2.06/1.48=1.39
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A discount on accounts payables would encourage which of the following activities?
When offering a discount to a customer for paying earlier, a firm would forfeit some income in order to increase cash on hand.
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