1 Lyman Nurseries purchased seeds costing $25,000 with terms of 3/15 net 30 EOM
ID: 2696003 • Letter: 1
Question
1 Lyman Nurseries purchased seeds costing $25,000 with terms of 3/15 net 30 EOM on January 12. How much will the firm pay if it takes the cash discount? What is the approximate cost of giving up the cash discount, using the simplified formula?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
E16-5 Horizon Telecom sold $300,000 worth of 120-day commercial paper for $298,000. What is the dollar amount of interest paid on the commercial paper? What is the effective 120-day rate on the paper?
Explanation / Answer
firm will pay = 25000-.03*25000 = $24250
interest paid on commercial paper = 300,000-298,000 = $2000
interest rate =
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