NUMERICAL PROBLEMS
  1. Find the effective annual interest rate on trade credit if the credit term is 3/10 net 30, and the firm does not avail of the discount facility.
  2. Assume a credit term of 3/10 net 30, opportunity cost of capital at 12% p.a., and Rs 20,0 being the average invoice value of the order. Should the buyer stretch the payment by 10 days and pay 2% penal interest rate?
  3. The issue cost of CP for Rs 10,00,000 is 2%. The discount is 12% and the maturity is 180 days. Find out the EIR.
  4. A company raises Rs 10,00,000 by issuing CP for 120 days. It is sold at 10% discount. Stamp duty and other charges account for 2% of the value. Calculate the effective cost of CP.
  5. With current assets of Rs 5,000, current liabilities of Rs 1,000 and a borrower’s ...

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