This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Parsons Company has a cash flow problem. The company owes its suppliers 300,000 on credit terms of ... (Read 101 times)

roselinechinyere27m

  • Hero Member
  • *****
  • Posts: 557
on: Jul 10, 2018
Parsons Company has a cash flow problem. The company owes its suppliers 300,000 on credit
  terms of 2/10 net 40, but Parsons doesn't have the cash to pay during the discount period. Parsons,
  however, can borrow the 300,000 at annual rate of 24.
 
  Should Parsons borrow the money to pay
  its accounts payable?
  A) Yes, the effective cost of forgoing the discount is greater than 24.
  B) No, the effective cost of forgoing the discount is equal to 24, and there are transactions costs
  associated with borrowing.
  C) No, additional borrowing will cost more for interest (60,000 per year) than the discount is
  worth.
  D) It doesn't matter because the present value of the cost of borrowing is exactly equal to the
  amount of the discount for paying within 10 days.

Question 2

A firm's cash position would most likely be hurt by
 
  A) increasing the net profit margin. B) retiring outstanding debt.
  C) decreasing excess inventory. D) establishing stricter (shorter) credit terms
Foundations of Finance ¦ Keown, Petty, Martin ¦ 9th Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

SVictor

  • Sr. Member
  • ****
  • Posts: 365
Reply #1 on: Jul 10, 2018
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 58% of students answer this correctly


roselinechinyere27m

  • Member
  • Posts: 557
Reply 2 on: Jul 10, 2018
YES! Correct, THANKS for helping me on my review

jamesnevil303

  • Member
  • Posts: 337
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

Women are two-thirds more likely than men to develop irritable bowel syndrome. This may be attributable to hormonal changes related to their menstrual cycles.

Did you know?

The shortest mature adult human of whom there is independent evidence was Gul Mohammed in India. In 1990, he was measured in New Delhi and stood 22.5 inches tall.

Did you know?

If you could remove all of your skin, it would weigh up to 5 pounds.

Did you know?

In ancient Rome, many of the richer people in the population had lead-induced gout. The reason for this is unclear. Lead poisoning has also been linked to madness.

Did you know?

About one in five American adults and teenagers have had a genital herpes infection—and most of them don't know it. People with genital herpes have at least twice the risk of becoming infected with HIV if exposed to it than those people who do not have genital herpes.

Angioplasty. One form is called balloon angioplasty, shown here. A balloon catheter is threaded into Angioplasty. One form is called balloon angioplasty, shown here. A balloon catheter is threaded into
Relative Positional Terms Relative Positional Terms
In 2013, Americans learned that the federal government massively surveys their phone calls and e-mai In 2013, Americans learned that the federal government massively surveys their phone calls and e-mai
Problem-Solving in Hangman Problem-Solving in Hangman
Acid deposition is a transboundary problem Acid deposition is a transboundary problem
Control of BP and Blood Flow Control of BP and Blood Flow
Video: Summation - defined, spatial, temporal & AP generation or not

For a complete list of videos, visit our video library