17. If d(6)-10%, what is an equivalent d(4)? a) 9.96% b) 8.75% c) 10.92% d) 11.8
ID: 2810982 • Letter: 1
Question
17. If d(6)-10%, what is an equivalent d(4)? a) 9.96% b) 8.75% c) 10.92% d) 11.83% 18. Find the number of interest conversion periods for i(9) for 5 years and 4 months. a) 48 conversion periods b) 45 conversion periods c) 7.11 conversion periods d) 576 conversion periods 19. You buy products on credit with 3/10, n/60. If you borrow from a local bank at a 21% interest rate, which of the following is the best option? Use Banker's rule. a) You give up the discount and take the full credit period. b) You borrow from the local bank at a 21% interest rate and take the discount by making the payment early.Explanation / Answer
Credtit facility of 3/10, n/60 means that 3% discount will be given for the payment if it is made with in 60 days of the invoice.
Borrow rate of 21% is per annum.
Let's assume, we bought goods of $1000 under the above credit terms. What would happen under both circumstances:
Option (A) Total payment after 60 days - $1000
Option (B) Take a loan of $ 970 ($1000 - $30 discount) and make the payment to supplier
Total payment to bank after 60 days = $ 970 + ($970 * 21% * 60/360)
= $970 + 33.95
= 1003.95
Therefore, it will not be profitable to take the bank loan and pay the supplier now. The correct answer would be option (a) pay to supplier after 60 days.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.