P15-6: a,b, c

The question is from chapter 15 questions a,b, and c.

Ill they give up (opportunity cost) over the 4 years if they y compound interest rate of 1.7% pay cash? what is the cost of the cash alternative at the end of 4 yecars? C. Should Mark and Stacy choose the financing or the cash alternative? ment discount decisions Prairie Manufacturing has four possible all of which offer different credit terms. Except for the differences ing hat their products and services are virtually identical. The credit d by these suppliers are shown in the following table. (Note: Assume in credit terms, a 365-day year.) Supplier Credit terms 1/5 net 30 EOM 2/20 net 80 EOM 1/15 net 60 EOM 3/10 net 9D EOM Calculate the approximate cost of giving up the early payment discount frorm he early p each supplier. If the firm needs short-term funds, which are currently available from its commercial bank at 9%, and if each of the suppliers is viewed separately, which, if any, of the suppliers' early payment discounts should the firm give up? Explain why. ccounts py het buss t fer, but he c. Now assume that the firm could stretch by 30 days its accounts payable (net r term a perniod only) from supplier M. What impact, if any, would that have on your answer in part b relative to this supplier? yment cycle On accepting the position of chief executive officer and dl tha firm's weekly payday from Ill they give up (opportunity cost) over the 4 years if they y compound interest rate of 1.7% pay cash? what is the cost of the cash alternative at the end of 4 yecars? C. Should Mark and Stacy choose the financing or the cash alternative? ment discount decisions Prairie Manufacturing has four possible all of which offer different credit terms. Except for the differences ing hat their products and services are virtually identical. The credit d by these suppliers are shown in the following table. (Note: Assume in credit terms, a 365-day year.) Supplier Credit terms 1/5 net 30 EOM 2/20 net 80 EOM 1/15 net 60 EOM 3/10 net 9D EOM Calculate the approximate cost of giving up the early payment discount frorm he early p each supplier. If the firm needs short-term funds, which are currently available from its commercial bank at 9%, and if each of the suppliers is viewed separately, which, if any, of the suppliers' early payment discounts should the firm give up? Explain why. ccounts py het buss t fer, but he c. Now assume that the firm could stretch by 30 days its accounts payable (net r term a perniod only) from supplier M. What impact, if any, would that have on your answer in part b relative to this supplier? yment cycle On accepting the position of chief executive officer and dl tha firm's weekly payday from