Safari File View History Bookmarks Window Question 4 (of 10) 1.50 points Answer

Question

Safari File View History Bookmarks Window Question 4 (of 10) 1.50 points Answer the following questions assuming a 360-day year Required: a. Calculate the approximate annual rate of return on investment of the following cash discount berms (Do not round intermediate calculations Enter your answer as a percentage rounded to 1 decimal place 2. 5/10 net 2/10 net 90 b. Which of these terms, tany, is not ikely to be a significant incentive to the customer to pay prompty 2/15, net 30 5/10, net 60 2/10, net 90 References eBook & Resources Leaming Objective: 05-05 Discuss how accounts receivable are reported on the balance sheet, including the valuation allowances for estimated uncollectible accounts and Worksheet Difficulty: 1 Easy

Explanation / Answer

a) 1. ROI = (360 days / 15 day loan) × 0.02 discount = 48.0%

2. ROI = (360 days / 50 day loan) × 0.05 discount = 36.0%

3. ROI = (360 days / 80 day loan) × 0.02 discount = 9.0%

b) 2/10, net 90

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