Exam 14: Managing Short-Term Financing Liabilities

Tivo Corporation purchases its raw materials on credit terms of 3/15, net 30. Assuming there are 360 days in a year, the annual percentage rate of non-free trade credit if the firm did not take discounts but did pay on the due date is:

MoJo Corporation purchases goods on credit terms of 4.5/15, net 40. The cost of non-free trade credit for the 25-day period if the firm did not take discounts but did pay on the due date is:

Fast Corporation recently borrowed $625,000 from its bank at a simple interest rate of 14 percent. The loan is for 10 months and, according to the loan agreement, the interest should be added to the amount borrowed and the total amount to be repaid in monthly installments. The loan's monthly payments and the annual percentage rate (APR) are, respectively:

Which of the following statements is true of the different types of short-term credits?

Net working capital represents the amount of current assets that is financed with long-term funds.