1.Horizon Telecom sold $300,000 worth of 120-day commercial paper for $298,000. What is the dollar amount of interest paid on the commercial paper? What is the effective 120-day rate on the paper?

 

2. Determine when a firm must pay for purchases made and invoices

dated on November 25 under each of the following credit terms:

a. net 30 date of invoice

b. net 30 EOM

c. net 45 date of invoice

d. net 60 EOM

3. Determine the cost of giving up the cash discount under each of the following terms of sale. (Note: Assume a 365-day year.)

a. 2/10 net 30

b. 1/10 net 30

c. 1/10 net 45

d. 3/10 net 90

e. 1/10 net 60

f. 3/10 net 30

g. 4/10 net 180