Assignment:
A. Tangshan Mining was extended credit terms of 3/15 net 30 EOM. The cost of giving up the cash discount, assuming payment would be made on the last day of the credit period would be _______. If the firm were able to stretch its accounts payable to 60 days without damaging its credit rating, the cost of giving up the cash discount would only be ______.
A) 74%; 21.90%
B) 73%; 24%
C) 73%; 18.25%
D) 75%; 25.09%
B. What is the value of a $1,000 face value bond that pays a 5% coupon rate that will mature in 3 years if the interest rate on similar risk bonds is 6%?
A) $ 1,054.23
B) $ 1,107.11
C) $ 973.27