Tattoo) lOR UPL ELL TAM Meee Chegg tne Sutyods v Myenne ¥ Mrhode Myler Caer Ue oe [eee ee ‘Question: You are currently re-evaluating your payables policy. Youre... Pestagueston You are currently re-evaluating your payables policy. Your current suppliers offer terms of 1.5/10, net 40 with a late payment fee of 1.5% per month. A supplier, ery wanting your business is willing to offer terms of 2.5/5, net 60 with no stated late payment fee. Your annual borrowing rate is 18%, Assume a 365 day year. a. How long should you delay payment given the ne terms of your current suppliers? Prove your answer by pris relating he annualized costo the dstount to your closed! investment or borrowing rate. b. How long should you delay payment given the a terms of your competing suppliers? Prove your answer by relating the annualized cost ofthe discount to your ee investment or borrowing rate. ee ¢. Based on an average invoice of $100,000, which FE supplier should you purchase from, ie, which set of re terms results in the minimum net present value cost? Answers Anonymous answered this S| [Ss Cheoy 249 answers cad TERMS OF CURRENT SUPPLIER=1.5/10,NET 40 WITH closed LATE PAYMENT FEE OF 1.5%PER MONTH.T MEANS cuent THAT IF WE MAKE PAYMENTS WITHIN 10 DAYS WE ce WILL GET A DISCOUNT OF 1.5%.N CASE WE ARE UNABLE TO PAY WITHIN 10 DAYS WE SHOULD PAY MAXIMUM WITHIN 40 DAYS OTHERWISE WE HAVE een TO PAY WITH A LATE FEE OF 1.5% PER MONTH. pert TERMS OF NEW SUPPLIER=2.5/5,NET 60.1T MEANS tee THAT IF WE MAKE PAYMENT WITH IN 5 DAYS WE ca WILL GET A DISCOUNT OF 2.5%.IN CASE WE ARE UNABLE TO MAKE PAYMENT WITH IN 5 DAYS WE SHOULD PAY MAXIMUM WITHIN 60 DAYS. BORROWING RATE =18% Macon Lewis answer 1542 answersOn EYE closed’ Fone andietems vita Ddoviegeedenncrist ac ‘temas fe ener de ae even of te cay pment coda Fo SOS prance city Sco ro Se 8 Dict)” (all aone parent Dace 5) oa = hee, a 185% ‘Sansa iv encore pent ope ino ay wom crate et SSE ae eee man saith el ‘dec the ote alow: (ions tect er (Qvoan01 es) a a ‘arosc0.28 pe Ea) 1 dou ao eae came pi cage 196 pe mth $0 a and ‘onpine mer 2% Gee 6 Thee apn ne So be Practice with similar questions @: You are currently re-evaluating your payables policy. Your current suppliers offer terms of 15/10, net 40 with a late