Purchase Solution

Cost of not taking the cash discount

Not what you're looking for?

Ask Custom Question

Acme offers its customers a cash discount of 4% if payment is made within 15 days, rather than its current net 45 policy. Assuming a 365-day year, what is the annual rate Acme is charging its customers who do not take the discount?

Purchase this Solution
Solution Summary

The solution explains how to calculate the cost of not taking a cash discount.

Purchase this Solution
Free BrainMass Quizzes
Learning Lean

This quiz will help you understand the basic concepts of Lean.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

View More Free Quizzes
Related BrainMass Solutions

  • Effective Rate and Bank Loans

    The solution explains how to calculate the effective rate of interest and evaluate the cost of a bank loan against the cost of not taking a cash discount. Step by step calculations are given for this solution.

  • Effective rate of interest

    The firm should not borrow as the cost of borrowing = 14.71 percent is more than Cost of not taking the discount = 13.07 percent Compares the rate of interest on a bank loan with the cost of not taking a cash discount.

  • Free trade credit/cash conversion cycle

    The cost of not taking a cash discount is calculated as Cost = % discount/(100-% discount) X 365/(Payment days - credit period) Suppose the terms are 2/10, n30.

  • Trade Credit Terms

    274002 Trade Credit Terms What is the cost of not taking the suppliers' discounts? Reed's purchased about 80% of its purchases on terms of 3/10, net 60 and did not take cash discounts offered by the suppliers.

  • Cash Discount

    122269 Cash Discount The Ogden Timber Company buys from its suppliers on terms of 2/10, net 35. Ogden has not been utilizing he discount offered and has not been taking the cash discount offered and has been taking 50 days to pay its bills.

  • Cash Discounts: Cost of Not Taking the Discount

    3968 Cash Discounts: Cost of Not Taking the Discount You place an order for 400 units of inventory at a unit price of $50. The supplier offers terms of 2/10, net 40. a. How long do you have to pay before the account is overdue?

  • Annual Rate of Interest and Cash Discount Terms

    COST OF FORGOING 2% CASH DISCOUNT if payment Within 10 days rather than paying at 30 days COST OF TRADE CREDIT TO THE CUSTOMER R= C(365)/D(100-C)=37.25% C=CASH DISCOUNT= 2% D= NO.

  • Cash Discount for Suppliers

    Higher the cash discount, with a constant net credit period, higher is the interest cost and vice-versa The solution explains how to calculate the cost of not taking the cash discount and how to choose between two suppliers.

  • Effective rate of interest

    In order to decide that we need to compare the cost of borrowing from the bank and the cost of not taking the discount.

View More Related Solutions