Rubash Corporation

Rubash Corporation Student Help )
If Rubash Corporation bought on terms of 1/10, net 30, what would be its nominal annual cost of costly trade credit? Assume a 365-day year.

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a. 18.4%
 
 
b. 24.5%
 
 
c. 22.5%
 
 
d. 12.5%
 
 
e. 20.0%
2)
If Rubash were able to delay payment until Day 50 rather than pay on Day 30, what would be the new nominal annual cost of its costly trade credit? Assume a 365-day year.
 
 
a. 15.0%
 
 
b. 9.2%
 
 
c. 13.8%
 
 
d. 12.3%
 
 
e. 10.8%
3)
If Rubash were able to delay payment until Day 50 rather than pay on Day 30, what would be the new nominal annual cost of its costly trade credit? Assume a 365-day year.
 
 
a. 15.0%
 
 
b. 9.2%
 
 
c. 13.8%
 
 
d. 12.3%
 
 
e. 10.8%
4)
If Rubash were unable to stretch its trade credit and hence had to pay by Day 30 and it did not take discounts, what would be its effective annual cost of costly trade credit? Assume a 365-day year.
 
 
a. 13.56%
 
 
b. 18.25%
 
 
c. 15.75%
 
 
d. 23.33%
 
 
e. 20.13%
5)
 
a. True
 
b. False
Wu Corporation has been offered a loan of $1,000,000 at a   rate of 8.5%, simple interest, with monthly interest payments and a 365-day   year. What would the effective interest rate be on this loan?
 
 
a. 8.84%
 
 
b. 9.00%
 
 
c. 8.50%
 
 
d. 7.75%
 
 
e. 6.33%
6)
If Wu’s $1,000,000 loan had been 8.5%, add-on, payable in 12 end-of-month installments, what would its APR have been?
 

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