Business, 06.03.2020 19:29 alisaharnauth

Arizona Health Services (AHS) buys $500,000 of a particular item (at gross prices) from its major supplier, Cardinal Health, which offers AHS terms of 3/20, net 60. Currently, the hospital is paying the supplier the full amount due on Day 60 but it is considering taking the discount, paying on Day 20 and replacing the trade credit with a bank loan that has a 12% interest rate.

1. What is the approximate annual cost of the costly trade credit?

A.13.80%
B.27.80%
C.50%

2. Should AHS replace its trade credit with the bank loan?

A. No. The bank loan rate is higher than the costly credit rate, so AHS should take the costly credit.
B. Yes. The bank loan rate is lower than the costly credit rate, so AHS should take the bank loan and refuse all trade credit.
C. Yes. The bank loan rate is lower than the costly credit rate, so AHS should replace the costly credit portion of the credit with a bank loan.
D. Yes. The bank loan rate is higher than the costly credit rate, so AHS should take the credit.

3. If the bank loan is used, how much of the trade credit should be replaced?

A. $13,477
B.$26,944
C.$53,889
D.$80,233

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 04:00

Burberry is pursuing a focused differentiation strategy aimed at high-end luxury customers. however, the company is also employing a segmentation strategy to separate customers within that focus. the strategy offers items at an entry-level price point for customers who desire to be like celebrities such as sarah jessica parker as well as couture items for those richest and celebrity customers. what strategy is burberry pursuing?

Answers: 3

Answer

Business, 22.06.2019 07:10

Refer to the payoff matrix. suppose that speedy bike and power bike are the only two bicycle manufacturing firms serving the market. both can choose large or small advertising budgets. is there a nash equilibrium solution to this game?

Answers: 1

Answer

Business, 22.06.2019 17:30

Betty contracted with scooby’s skate store to deliver a pair of skates to jake for his birthday. scooby’s owner was going on a trip and delegated the delivery of the skates to brian. brian failed to make delivery.can jake sue brian for breach of contract, as he was not a party to the original contract? explain your answer. brian was not a party to the original contract. why would a court hold him responsible for failing to make delivery? if you do not think a court would hold him responsible, explain your answer. can jake sue scooby’s skates for breach of contract? explain your answer.

Answers: 2

Answer

Business, 22.06.2019 22:30

Using the smith's bbq report, the cost of wine for next week will increase by 2% from the current week. if all other cost of sales stays constant, what will be the approximate total cost of sales for next week?

Answers: 2

Answer

You know the right answer?

Arizona Health Services (AHS) buys $500,000 of a particular item (at gross prices) from its major su...

Questions