Company X sells on a 1/30, net 60 basis. Customer Y buys goods invoiced at $1,000. a.

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Company X sells on a 1/30, net 60 basis. Customer Y buys goods invoiced at $1,000.

a. How much can Y deduct from the bill if Y pays on day 30?

b. What is the effective annual rate of interest if Y pays on the due date rather than on day 30?

c. How would you expect payment terms to change if

i. The goods are perishable.

ii. The goods are not rapidly resold.

iii. The goods are sold to high-risk firms.

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Principles of Corporate Finance

ISBN: 978-0077404895

10th Edition

Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen

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Question Posted: Dec 31, 2012 09:54 AM

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Company X sells on a 1/30, net 60 basis. Customer Y buys goods invoiced at $1,000. a.

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a 1 of 1000 10 b 1 for 30 d...View the full answer

Principles of Corporate Finance

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