Gonzales Company currently uses maximum trade credit by not taking discounts on its purchases. The standard industry credit terms offered by all its suppliers are 2/10, net 38 days, and the firm pays on time. The new CFO is considering borrowing from its bank, using short-term notes payable, and then taking discounts. The firm wants to determine the effect of this policy change on its net income. Its net purchases are $11,760 per day, using a 365-day year. The interest rate on the notes payable is 10%, and the tax rate is 40%. If the firm implements the plan, what is the expected change in net income? Do not round intermediate calculations.
A. $32,803
B. $36,084
C. $33,787
D. $32,147
E. $38,052
Answer: A
Business
You might also like to view...
The five original members of the Central American Integration System did not include:
A) El Salvador. B) Honduras. C) Guatemala. D) Nicaragua. E) Venezuela.
Business
Since suppliers are so close to the market, they are valuable sources of information about consumer problems, marketing opportunities, and new product possibilities
Indicate whether the statement is true or false
Business
________ is one of the best ways to increase share of customer
A) Targeting new customers B) Using bait and switch C) Cross-selling D) Divesting E) Partnership marketing
Business
Which of the following would be included in the definition of nuclear family?
a. grandparents b. uncles and aunts c. father and mother d. cousins
Business