It is typically beneficial for companies to take advantage of early-payment discounts allowed on purchases made...
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It is typically beneficial for companies to take advantage of early-payment discounts allowed on purchases made on credit. To see why this is the case, determine the effective rate of interest associated with not taking advantage of the early-payment discount for each of the following situations. Assume in each case that payment is made on the 60th day of the billing cycle. Required: 1. What is the opportunity cost of not taking advantage of the discount associated with purchases made under the following terms: 6/30, n/60? 2. What is the opportunity cost of not taking advantage of the discount associated with purchases made under the following terms: 5/30, n/60? 3. To motivate managers to take early-payment discounts, what is the appropriate accounting treatment for purchase discounts? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the opportunity cost of not taking advantage of the discount associated with purchases made under the following terms: 6/30, n/60? (Do not round intermediate calculations. Enter your final answer as a percentage rounded to 2 decimal places (i.e., .1524 = 15.24%).) Opportunity cost 197.44 % Required 1 Required 2 > It is typically beneficial for companies to take advantage of early-payment discounts allowed on purchases made on credit. To see why this is the case, determine the effective rate of interest associated with not taking advantage of the early-payment discount for each of the following situations. Assume in each case that payment is made on the 60th day of the billing cycle. Required: 1. What is the opportunity cost of not taking advantage of the discount associated with purchases made under the following terms: 6/30, n/60? 2. What is the opportunity cost of not taking advantage of the discount associated with purchases made under the following terms: 5/30, n/60? 3. To motivate managers to take early-payment discounts, what is the appropriate accounting treatment for purchase discounts? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the opportunity cost of not taking advantage of the discount associated with purchases made under the following terms: 6/30, n/60? (Do not round intermediate calculations. Enter your final answer as a percentage rounded to 2 decimal places (i.e., .1524 = 15.24%).) Opportunity cost 197.44 % Required 1 Required 2 >
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Sure lets calculate the opportunity cost of not taking advantage of the discount for each of the given scenarios 1 Opportunity cost for the terms 630 ... View the full answer
Related Book For
Cost management a strategic approach
ISBN: 978-0073526942
5th edition
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
Posted Date:
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