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 103 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
Excellent

bitingbit

  • Member
  • Posts: 323
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

The top five reasons that children stay home from school are as follows: colds, stomach flu (gastroenteritis), ear infection (otitis media), pink eye (conjunctivitis), and sore throat.

Did you know?

People often find it difficult to accept the idea that bacteria can be beneficial and improve health. Lactic acid bacteria are good, and when eaten, these bacteria improve health and increase longevity. These bacteria included in foods such as yogurt.

Did you know?

Chronic marijuana use can damage the white blood cells and reduce the immune system's ability to respond to disease by as much as 40%. Without a strong immune system, the body is vulnerable to all kinds of degenerative and infectious diseases.

Did you know?

Your chance of developing a kidney stone is 1 in 10. In recent years, approximately 3.7 million people in the United States were diagnosed with a kidney disease.

Did you know?

If all the neurons in the human body were lined up, they would stretch more than 600 miles.

Blood flow before TIPS Blood flow before TIPS
Coolant flow through the impeller and scroll of a coolant pump for a V-type engine. Coolant flow through the impeller and scroll of a coolant pump for a V-type engine.
Change in air temperature at various air flow rates for a 4 pass operation Change in air temperature at various air flow rates for a 4 pass operation
Problem Problem
linear programming problem, applying simplex method and sensitivity analysis linear programming problem, applying simplex method and sensitivity analysis
The large, white flowers of giant saguaro cactus (Carnegiea gigantea) produce sweet nectar. The flow The large, white flowers of giant saguaro cactus (Carnegiea gigantea) produce sweet nectar. The flow
Video: Mendel's Principles of Inheritance (Father of Genetics)

For a complete list of videos, visit our video library