1) $24,740 = net cost of the sale = 25,000 - 1%(25,000). This is all you need to borrow from the bank to be able to pay on day 10.
2) Purchases are made on the 15th and the 30th of each month, so that means 2 x 12 months, or 24 purchases each year.
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Jeanne David
Academic
University of Detroit Mercy
Farmington Hills MI
United States
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Original Message:
Sent: 10-16-2019 03:04 PM
From: Syed Yousuf Jamal
Subject: P2- How to solve in easy way
how 24 times please
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Syed Yousuf Jamal
None
Alexandria
Egypt
Original Message:
Sent: 10-16-2019 02:37 PM
From: Jeanne David
Subject: P2- How to solve in easy way
For each batch of goods purchased:
- Savings = $25,000 x 1% = $250.00
- Cost of borrowing: Borrow $24,750 to pay 30 days earlier (on 10th day rather than on 30th day). Interest cost = $24,750 x 10% x 30/365 = $203.42
- Net savings per batch = $250 - 203.42 = $46.58 per batch.
As this will occur 24 times during the year, the net savings for the year = $46.58 x 24 = $1,117.92, or $1,118 rounded.
Good luck on your studies!
Jeanne
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Jeanne David
Academic
University of Detroit Mercy
Farmington Hills MI
United States
Original Message:
Sent: 10-10-2019 08:03 AM
From: Syed Yousuf Jamal
Subject: P2- How to solve in easy way
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Syed Yousuf Jamal
None
Alexandria
Egypt
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