calculating cost of payable, interest rates, and days for a loan.Problem 26-13
Simple Simon’s Bakery purchases supplies on terms of 1/10, net 25. If Simple Simon’s cho
take the discount offered, it must obtain a bank loan to meet its short-term financing needs.
local bank has quoted Simple Simon’s owner an interest rate of 12\% on borrowed funds. S
Simple Simon’s enter the loan agreement with the bank and begin taking the discount?
Terms
Comparable loan
1,00\%
12,00\%
10
net
25
Additional days
Interest rate (additional days)
Cost of payables
Decision:
Requirements
1. In cell D9, by using cell references, calculate the additional days of credit (1 pt.).
2. In cell D10, by using cell references, calculate the implicit interest rate charged for the add
days of credit (1 pt.).
3. In cell D11, by using cell references, calculate the cost of payables (1 pt.).
4. In cell D13, type either trade credit or bank loan after comparing the cost of payables aga
comparable loan offered by the bank (1 pt.).
25. If Simple Simon’s chooses to
short-term financing needs. A
12\% on borrowed funds. Should
in taking the discount?
s of credit (1 pt.).
est rate charged for the additional
les (1 pt.).
ng the cost of payables against the
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