Asked by Franco Volschenk on Apr 23, 2024
Verified
David & Dora Footwear Supplies usually tries to take advantage of cash discounts even if it must borrow the money for a few days in order to pay the invoice in time. Compute the savings on David & Dora's purchases and terms from two different suppliers. Use a 365-day year. Assume that the number of interest days is the time between the due date and the last date to take advantage of the cash discount.
Cash Discounts
A reduction in the price of goods or services offered to customers as an incentive for early payment within a specified period.
Interest Days
The number of days over which interest accrues on a loan, deposit, or investment.
- Examine the economic advantages of utilizing cash discounts through the acquisition of short-term loans.
- Calculate the financial outcomes, whether savings or expenses, associated with utilizing short-term loans to timely settle invoices.
- Show proficiency in executing complex financial computations with precision.
Verified Answer
ZK
Zybrea KnightMay 02, 2024
Final Answer :
Cash
Days of
Amount of
Discount
Interest
Interest
Savings
a.
$68.13
45
$27.84
$40.28
b.
$44.46
22
$19.37
$25.09
Cash
Days of
Amount of
Discount
Interest
Interest
Savings
a.
$68.13
45
$27.84
$40.28
b.
$44.46
22
$19.37
$25.09
Learning Objectives
- Examine the economic advantages of utilizing cash discounts through the acquisition of short-term loans.
- Calculate the financial outcomes, whether savings or expenses, associated with utilizing short-term loans to timely settle invoices.
- Show proficiency in executing complex financial computations with precision.
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