Question 1,
Base on the suggestions of the new CEO from Microsoft Ltd, below are the scenario and findings
Scenario : 1/10 net 20
This information can be used to compute the credit cost of borrowing this money. X
% Discount
100 - % Discount 360
Credit Period – Discount Periods
= 1 X 360
99 10
= 0.363636
= 36.36%.
Annualizing The Credit Cost
The 10-day discount period occurs 36 times per year. Using this information, it is possible to compute the effective annual rate of interest on a 360-day year: = [1+(credit cost / times compounded per year)] degree “Times compounded per year” – 1
= [1+(36.36% /36)] degree 36 – 1
= 0.4358
= 43.59%
Annualized , the 36.36 percent cost of interest amounts to a substantial 43.59 percent.
Scenario 2 : 1/10 net 30
This information can be used to compute …show more content…
In normal circumstances, the hotel will provide a terms and conditions for Mr. Lee to review and sign off. It will list out the terms for Mr. Lee in which he and his family are entitled to enjoy under this contract. It will have stated out the price payable, date and time to enjoy this offer, cancellation policy and if penalty will require, if the booking is transferable.
A contract may be frustrated where there is a change of circumstances, after the contract was made, which is not the fault of either of the parties, which renders the contract either impossible to perform or deprives the contract of its commercial purpose. Where a contract is found to be frustrated, each party is discharged from future obligations under the contract and neither party may sue for breach. ( http://www.e-lawresources.co.uk/Frustrated-contracts.php)
The contract in between Mr. Lee and Harbour Plaza Hotel does not sufficient provision for the refund policy if occur due to the cancellation by HKSAR. Cases reference as below
Base on the suggestions of the new CEO from Microsoft Ltd, below are the scenario and findings
Scenario : 1/10 net 20
This information can be used to compute the credit cost of borrowing this money. X
% Discount
100 - % Discount 360
Credit Period – Discount Periods
= 1 X 360
99 10
= 0.363636
= 36.36%.
Annualizing The Credit Cost
The 10-day discount period occurs 36 times per year. Using this information, it is possible to compute the effective annual rate of interest on a 360-day year: = [1+(credit cost / times compounded per year)] degree “Times compounded per year” – 1
= [1+(36.36% /36)] degree 36 – 1
= 0.4358
= 43.59%
Annualized , the 36.36 percent cost of interest amounts to a substantial 43.59 percent.
Scenario 2 : 1/10 net 30
This information can be used to compute …show more content…
In normal circumstances, the hotel will provide a terms and conditions for Mr. Lee to review and sign off. It will list out the terms for Mr. Lee in which he and his family are entitled to enjoy under this contract. It will have stated out the price payable, date and time to enjoy this offer, cancellation policy and if penalty will require, if the booking is transferable.
A contract may be frustrated where there is a change of circumstances, after the contract was made, which is not the fault of either of the parties, which renders the contract either impossible to perform or deprives the contract of its commercial purpose. Where a contract is found to be frustrated, each party is discharged from future obligations under the contract and neither party may sue for breach. ( http://www.e-lawresources.co.uk/Frustrated-contracts.php)
The contract in between Mr. Lee and Harbour Plaza Hotel does not sufficient provision for the refund policy if occur due to the cancellation by HKSAR. Cases reference as below