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Author Question: Parsons Company has a cash flow problem. The company owes its suppliers 300,000 on credit terms of ... (Read 104 times)

roselinechinyere27m

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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
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SVictor

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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.
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roselinechinyere27m

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

kthug

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Reply 3 on: Yesterday
Gracias!

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