Solution: Use Equation (13-1). 3/(100 - 3) x 360/90 = 12.37%.
29. For the following import purchase, calculate the annual cost of the cash discount forgone, and determine the date and amount paid if the discount is taken: $100, 4/10, net 30. Assume that the invoice date is March 20 and that there are 30 days in a month.
a. 75%, $960, March 30
b. 55%, $960, April 10
* c. 75%, $960, March 30
d. 55%, $860, March 20
e. 75%, $860, March 30
Solution: 4/(100 - 4) x 360/20 = 75%; $1,000 (1 - 0.04) = $960; and March 20 + 10 = March 30.
Use the following information to answer the next two questions:
A multinational company has factored its accounts receivable of $20,000 due in one month. The factor advances 75 percent of the receivables, charges 1.5 percent per month, and 2 percent commission. Both the interest and the commission are paid on a discount basis.
30. What are the net proceeds available to the company?
a. $15,000.00
b. $14,700.00
c. $14,550.50
d. $14,550.25
* e. $14,381.00
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