Answer:
b. The market value will increase
Explanation:
In the case when the rate of the interest decrease so the market value of the bond would be increased. As the market value of the bond and the rate of interest has an inverse relationship between them. In the case when the rate of interest increased than the market value of the bond decreased and vice versa
Therefore option b is correct
Samuel, Inc. has Accounts Receivable of $110,000 and an Allowance for Doubtful Accounts of $17,000. If it writes-off a customer account balance of $1,700, what is the amount of its net accounts receivable?A) 591,300. B) $108,300. C) $110,000. D) $93,000.
Answer:
the net account receivable is d. $93,000
Explanation:
The computation of the net account receivable is shown below:
= (Account receivable - written off amount) - (Allowance for doubtful accounts - written off amount)
= ($110,000 - $1,700) - ($17,000 - $1,700)
= $108,300 - $15,300
= $93,000
Hence, the net account receivable is $93,000
We simply applied the above formula so that the correct value could come
And, the same is to be considered
What are some actions that may be taken by a nation to reduce interest rates in a country?
Answer:
The solution to this question can be defined as follows:
Explanation:
Its federal reserve of a nation will undertake several measures mostly on a bid to avoid the interest rate in the world. Using an exchange rate process, they increase the supply of money, lessen the number of discounts or even the money supply. Each of these steps raises the availability of resources as well as the rate of interest on the economy drops with a primary component of capital.
Discuss the relationship between competition and consumer expectations.
Answer:
The relationship between competition and consumer expectations is by what the compitition is creating in terms of product and functionability. And the consumer expectation is what will help the by buying into this product.
Explanation:
Eileen and Hal, a married couple filing jointly, received $10,000 of Series I bond interest in 2020. If all the proceeds of the redeemed bond were used to pay qualified education expenses and their modified adjusted gross income exceeded the applicable dollar amount by $30,000, how much of the bond interest could they exclude from income?
Answer:
$0 amount of interest to be excluded from Income
Explanation:
Interest income on bond can be excluded from Income if following two condition are fulfill.,
a) Bond are Series 1 or Series EE bond bought after 1989
b) Redemption money is used for the payment or Expense of Qualified Education expense
If the boNd amount is more then Qualified Expense only amount of Interest can be excluded from the Income . and Further this interest are phase out if exceed the threshold based on the level of Modified Adjusted Gross Income. Phaseout Threshold for Couple filling jointly for 2020 is $123,550 and phaseout limit is $153,550
As Given that MAGI exceeds the phaseout threshold by $30000
Phaseout Reduction = Redemption amount × Income Exceed by Phaseout thresold / (Differences of Phaseout thresold - Phaseout limit ie $30000)
Phaseout Reduction = 10000×30000/(153550-123550)
Phaseout Reduction = 10000
Tax free Redemption amount of Bond = $10000-$10000
Tax free Redemption amount of Bond = $0
$0 amount of interest to be excluded from Income
Let's solve this step by step:
Interest income on bond can be excluded from Income if following two condition are fulfill.,
a) Bond are Series 1 or Series EE bond bought after 1989
b) Redemption money is used for the payment or Expense of Qualified Education expense
If the bond amount is more then Qualified Expense only amount of Interest can be excluded from the Income and further this interest are phase out if exceed the threshold based on the level of Modified Adjusted Gross Income.
Phaseout Threshold for Couple filling jointly for 2020 is $123,550 and phaseout limit is $153,550
As Given that MAGI exceeds the phaseout threshold by $30000
Phaseout Reduction = Redemption amount × Income Exceed by Phaseout thresold / (Differences of Phaseout thresold - Phaseout limit i.e. $30000)
Phaseout Reduction = [tex]\frac{10000 *30000}{(153550-123550)}[/tex]
Phaseout Reduction = 10000
Tax free Redemption amount of Bond = $10000-$10000
Tax free Redemption amount of Bond = $0
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For Flynn Company, variable costs are 70% of sales, and fixed costs are $195,000. Management’s net income goal is $75,000. Compute the required sales in dollars needed to achieve management’s target net income of $75,000.
Answer:
i would 75,345 is your answer
Explanation:
The required sales in dollars needed to achieve management’s target net income of $75,000 is $900,000.
Required sales in dollarUsing this formula
Required sales in dollar=Fixed cost+ Net income/ (1-percentage)
Let plug in the formula
]Required sales in dollar=$195,000+$75,000 /(1-.70)
Required sales in dollar=$270,000/.30
Required sales in dollar=$900,000
Therefore the required sales in dollars needed to achieve management’s target net income of $75,000 is $900,000.
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QUESTIONS
1. Explain how the procurement process is handled by the city of Copenhagen
Answer:um
Explanation:
how to get money fast
Answer:
social media
Explanation:
nothing social media cant do , put up ads or fliers for ur buisness, along with a side job . have friends promote whatever your doing, make a website. do something that draws audience attention.
Year Cash Flow 0 –$5,500 1 1,300 2 1,500 3 1,900 4 1,400 What is the payback period for the set of cash flows given above?
Answer: 3.57 years
Explanation:
Payback period is the amount of time it would take for a project to pay back its initial investment.
Investment = $5,500
Year 1 + 2 + 3 = 1,300 + 1,500 + 1,900 = $4,700
With cash flow of $1,400 coming in fourth year and $800 remaining for payback, investment will be paid back in fourth year.
Payback period = Year before payback + Amount left/ Cashflow in year of payback
= 3 + (5,500 - 4,700) / 1,400
= 3.57 years
During March, a firm expects its total sales to be $160,000, its total variable costs to be $95,000, and its total fixed costs to be $25,000. The contribution margin for March is:a. $65,000.b. $90,000.c. $120,000.d. $40,000.e. $25,000.
Answer:
a. $65,000
Explanation:
Calculation for the contribution margin for March
Total sales 160,000
Less total variable 95,000
Contribution margin 65,000
(160,000-95,000)
Therefore the The contribution margin for March is: $65,000
Blasto, Inc., operates several mines. At one, a typical batch of ore run through the plant yields three products: lead, copper, and manganese. At the split-off point, the intermediate products cannot be sold without further processing. The lead from a typical batch sells for $50,000 after incurring additional processing costs of $15,350. The copper is sold for $94,000 after additional processing costs of $11,500, and the manganese yield sells for $65,000 but requires additional processing costs of $17,150. The joint costs of processing the raw ore, including the cost of mining, are $155,000 per batch.
Required:
Use the estimated net realizable value method to allocate the joint processing costs. (Do not round intermediate calculations.)
Lead Copper Manganese
Approximate sales value at split-off
Percent of total sales values at split-off % % %
Cost allocation
Answer:
joint processing costs allocated to lead = $32,550
joint processing costs allocated to copper = $77,500
joint processing costs allocated to manganese = $44,950
Explanation:
lead can be sold at $50,000 but needs further processing worth $15,350, so net realizable value = $50,000 - $15,350 = $34,650
copper can be sold at $94,000 but needs further processing worth $11,500, so net realizable value = $94,000 - $11,500 = $82,500
manganese can be sold at $65,000 but needs further processing worth $17,150, so net realizable value = $65,000 - $17,150 = $47,850
total realizable value = $165,000
total joint processing costs = $155,000
allocation rate of processing cost = $155,000 / $165,000 = $0.939393 per dollar of net realizable value
joint processing costs allocated to lead = $0.939393 x $34,650 = $32,550
joint processing costs allocated to copper = $0.939393 x $82,500 = $77,500
joint processing costs allocated to manganese = $0.939393 x $47,850 = $44,950
A monopolist:____.a. produces more than the competitive outcome. b. has zero profits. c. has the same profits as what would have in a competitive market. d. produces less than the competitive outcome. e. produces the same units as the competitive outcome.
Answer: d. produces less than the competitive outcome.
Explanation:
A monopolist by definition is the only one producing the certain good or service in question. This is in contrast with a competitive situation where many firms will be producing that same good.
Monopolies therefore will be unable to produce the same amount that a competitive outcome would because they would not have the capacity. This leads to a situation where monopolies can charge higher for their goods and services as opposed to competitive firms.
Summarize the ways through which sales and operations planning can be integrated. Then, extend your findings to additional supply chain management processes that you feel could be better integrated. Which two (or more) processes did you integrate? Why and how?
Answer:
Sales and Operation Planning is integrated to achieve business goals. The executives and business managers will be able to focus on achievement of company goals.
Explanation:
Sales and operations planning integration is a key function for any business. The leadership management is able to focus on strategic planning based on demand and supply of the products. They are able to improve their forecasting and bring accuracy in budgeting. Companies are able to improve their business profits based on integrated planning.
Concert Production is planning an appearance of the top band Iggy Wiggy. They plan to buy custom desgined T-shirts to sell at the stadium where the concert will take place. The T-shirt will sell for $25 and the cost per shirt is $8. Previous experience at the Concert Productions suggests that after the concert is over, T-shirts can still be sold, but the selling price will only be $5 per shirt. Based on analysis of previous similar concerts, the company estimates sales of the T-shirt will be 6,000 units. However, the analysis also shows that the standard deviation in similar situations is 800 units.
How many Iggy Wiggy T-shirts should the company order?
Answer:
Iggy Wiggy T-shirts should order 6,829 units of T-shirt
Explanation:
Cost per T-shirt = $8.00
Selling Price per T-shirt = $25
Marginal Profit = 25 - 8 = $17
Marginal Loss when t-shirt is sold for $5 = $8 - $5 = $3
Mean = 6000 units
Standard deviation = 800 units
Using the News Vendor Model
Q = MP / MP + ML
Q = 17 / (17+3)
Q = 17 / 20
Q = 0.85
Using NORMINV in Ms excel
= NORMINV (probability, mean, standard deviation)
= NORMINV(0.85,6000,800)
= 6829.14 units
Thus, Iggy Wiggy T-shirts should order 6829 units of T-shirt.
If the general level of interest rates in the economy moves up, then investors will require a _____ rate of return on securities, and, in general, stock prices should _____ , ceteris paribus.
A. lower, increase
B. higher, decline
C. higher, increase
D. lower, decline
Answer:
B. higher, decline
Explanation:
Monetary policy can be defined as the actions (macroeconomic policies) adopted and undertaken by the central bank of a particular country to control the money supply and interest rates so as to boost or enhance economic growth. The central bank uses monetary policies to manage inflation, economic growth through long-term interest rates and level of unemployment in a country. In order to boost economic growth, monetary policy is used to increase money supply (liquidity) while it is also used to prevent inflation by reducing money supply.
If the general level of interest rates in the economy moves up, then investors will require a higher rate of return on securities such as bonds, and, in general, stock prices should decline because they are less volatile, ceteris paribus (all things being equal).
Suppose that the value of an investment in the stock market has increased at an average compound rate of about 5% since 1909. It is now 2016.
Required:
a. If someone invested $1,000 in 1909, how much would that investment be worth today?
b. If an investment from 1903 has grown to $1 million, how much was invested in 1903?
c.
Answer:
a. If someone invested $1,000 in 1909, the investment's worth today is $185,035.48
b. If an investment from 1903 has grown to $1 million, the amount invested in 1903 is $4,032.82
Explanation:
a) FV (Future Value) $185,035.48
PV (Present Value) $1,000.00
N (Number of Periods) 107.000
I/Y (Interest Rate) 5.000%
PMT (Periodic Payment) $0.00
Starting Investment $1,000.00
Total Principal $1,000.00
Total Interest $184,035.48
b) You will need to invest $4,032.82 at the beginning to reach the future value of $1,000,000.00.
FV (Future Value) $999,999.00
PV (Present Value) $4,032.82
N (Number of Periods) 113.000
I/Y (Interest Rate) 5.000%
PMT (Periodic Payment) $0.00
Starting Investment $4,032.82
Total Principal $4,032.82
Total Interest $995,966.1
XYZ Corporation issued 7 million shares of common stock in its initial public offering. It later purchased 500,000 shares of Treasury stock. XYZ recently engaged an underwriter to raise capital by selling an additional 3 million shares through a standby rights offering. By the expiration date of the offering, only 2 million shares were sold through exercise of the rights. As a result, how many shares will XYZ have outstanding
Answer:
The number shares XYZ will have outstanding is 8,500,000 shares.
Explanation:
Shares outstanding refers to the addition of the shares of a company that are currently held by its shareholders, the share blocks in the hands of institutional investors, and its restricted shares owned by its officers and insiders, but minus the treasury shares which are held by the company itself.
From the question, we have the following:
Number shares issued in initial public offering = 7,000,000
Treasury stock purchased = 500,000
Shares sold by the expiration date of the offering additional 3 million shares = 2,000,000
Therefore, the number of shares outstanding can be calculated as follows:
Number of shares outstanding = Number shares issued in initial public offering - Treasury stock purchased + Shares sold by the expiration date of the offering additional 3 million shares = 7,000,000 - 500,000 + 2,000,000 = 8,500,000
Therefore, the number shares XYZ will have outstanding is 8,500,000 shares.
Which of the following accounts is a temporaryâ account? A. Accounts Receivable B. Supplies C. Withdrawals D. Cash
Answer:
C. Withdrawals
Explanation:
The temporary account refer to the account that are closed at the closing accounting period. It involves the revenue, expenses, and the withdrawal account. it is also called the nominal account that involves these type of accounts
According to the given options, the option C is correct
And, the rest of the options of the wrong
If pilots and flight attendants agree to wage and benefit reductions in the wake of the financial difficulties in the airline industry, what impact would this have on the supply and demand in the market for airline service, assuming no other changes take place in this market?
Answer:
Salaries are an important input in any industry, including airlines, so a decrease in the cost of inputs should result in a rightward shift of the supply curve, decreasing equilibrium price and total quantity supplied. But this shift in the supply curve will not shift the demand curve, the equilibrium point will change but following the existing demand curve.
A Chinese company exchanges yuan (Chinese currency) for dollars. It uses these dollars to purchase scrap metal from a U.S. company. As a result of these transactions, Chinese net exports a. increase, and U.S. net capital outflow increases. b. decrease, and U.S. net capital outflow decreases. c. increase, and U.S. net capital outflow decreases. d. decrease, and U.S. net capital outflow increases.
Answer:
d. decrease, and U.S. net capital outflow increases.
Explanation:
Yuan is the currency of the country China and the currency of United States of America is dollar. Every country in the world does imports of some goods to meet the demands of the country and exports some items to the other countries that is produced in abundance in the parent country. In this way, countries earn huge capital by doing importing and exporting.
In the context, China will buy scrap metal from United States, thus China is importing a good from U.S. So China will have more of import. Hence China net export will decrease. While U.S. is selling goods to China in exchange of dollar and earning capital. So, net capital outflow of the United States will increase.
Gable Company uses three activity cost pools. Each pool has a cost driver. Information for Gable Company follows:
Activity Cost Pool Total Cost
of Pool Cost Driver Estimated Total of Cost Driver
Machining $ 312,000 Number of machine hours 80,000
Designing costs 73,600 Number of design hours 8,000
Setup costs 71,600 Number of batches 500
Suppose that Gable Company manufactures three products, A, B, and C. Information about these products follows:
Product A Product B Product C
Number of machine hours 30,000 40,000 10,000
Number of design hours 3,200 1,800 3,000
Number of batches 50 175 275
Required:
Determine the amount of overhead assigned to each product.
Answer:
Results are below.
Explanation:
First, we need to calculate the activity rate for each activity:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Machining= 312,000/80,000= $3.9 per machine hour
Designing costs= 73,600/8,000= $9.2 per design hour
Setup costs= 71,600/500= $143.2 per batch
Now, we can allocate overhead to each product:
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
Product A:
Machining= 3.9*30,000= 117,000
Designing costs= 9.2*3,200= 29,440
Setup costs= 143.2*50= 7,160
Total overhead= $153,600
Product B:
Machining= 3.9*40,000= 156,000
Designing costs= 9.2*1,800= 16,560
Setup costs= 143.2*175= 25,060
Total overhead= $197,620
Product C:
Machining= 3.9*10,000= 39,000
Designing costs= 9.2*3,000= 27,600
Setup costs= 143.2*275= 39,380
Total overhead= $105,980
Overhead assigned to product A, B and C are $153,600 , $197,620 and $105,980
Overhead based problem:Computation of activity rate;
Cost (A) Cost Driver(B) Activity Rate(A / B)
Machining $312000 $80000 3.9
Designing $73600 $8000 9.2
Setup $71600 $500 143.2
Overhead assigned = Machining + Designing + Setup
Overhead assigned to product A = (3.9)(30,000) + (9.2)(3200) + (143.2)(50)
Overhead assigned to product A = 117,000 + 29440 + 7160
Overhead assigned to product A = $153,600
Overhead assigned to product B = (3.9)(40,000) + (9.2)(1800) + (143.2)(175)
Overhead assigned to product B = 156,000 + 16,560 + 25,060
Overhead assigned to product B = $197,620
Overhead assigned to product C = (3.9)(10,000) + (9.2)(3,000) + (143.2)(275)
Overhead assigned to product C = 39,000 + 27,600 + 39380
Overhead assigned to product C = $105,980
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The disagreements between Hamilton and Jefferson led to a revised Constitution. a reformed Congress. new cabinet members. new political parties.
Answer:
new politacal parties
Explanation:
im taking the test right now
Answer:
d
Explanation:
Suppose you want to predict sneaker sales on the basis of advertising expenditures and sneaker color, red or blue. You create one dummy variable for the sneaker color (Red = 1 for red sneakers and Red = 0 for blue sneakers) and run the regression on data collected over ten years using the dummy variable and advertising expenditures as your independent variables.
The equation you obtain is:
Sales = 631,085 + 533,024(Red) + 50.5(Advertising)
a. How would you interpret the regression model?
b. How would you interpret the coefficient for red sneakers?
Answer:
a. This implies the sales of sneaker increase when the color of the sneaker is red and Advertising expenses increase.
This implies that the sneaker sales increases by $533,024 when the sneaker color is red.
Explanation:
a. How would you interpret the regression model?
The estimated regression model given in the question is as follows:
Sales = 631,085 + 533,024(Red) + 50.5(Advertising) ................ (1)
From equation (1), Sales is the estimated dependent variables; 631,085 is the estimated constant; 533,024 is the estimated coefficient of the red color; and 50.5 is the estimated coefficient of the advertising expenditures
The interpretation of the above is that sneaker color and the advertising expenditures have positive effect on the sales of sneaker. This implies the sales of sneaker increase when the color of the sneaker is red and Advertising expenses increase.
b. How would you interpret the coefficient for red sneakers?
From equation (1) in part a above, the estimated coefficient of the sneaker color is 533,024.
Since the sign in front of it is positive, this implies that the sneaker sales increases by $533,024 when the sneaker color is red.
Regression equation are used to model the mathematical relationship between an independent and dependent variable. Hence, the interpretation of the model goes thus :
There is a positive relationship between the dependent variable(sales) and the independent variables (Red sneakers aan advertising) Sales realized on sneakers increases by $533,024 when sneaker color is Red.The coefficients of the independent variable gives information about the kind of association between the variables.
Positive Coefficient values indicate, positive association while negative Coefficient depicts negative relationship.
The values of the coefficient also denotes the numerical change experienced by the dependent variable as changes is being made to the independent variable.
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Click this link to view O*NET's Work Activities section for Electrical Power-Line Installers and Repairers. Note that
common activities are listed toward the top, and less common activities are listed toward the bottom. According to
O*NET, what are some common work activities Electrical Power-Line Installers and Repairers perform? Check all
that apply.
communicating with supervisors, peers, or subordinates
inspecting equipment, structures, or material
getting information
O staffing organizational units
operating vehicles, mechanized devices, or equipment
fundraising to pay for work activities
Answer 1,2,3,5
Answer:
2 4 5 6
Explanation:
I had to get the question wrong so i could give the right answer
brainliest please
edit:i put the wrong numbers, i added the right ones
Answer:
Its , 1, 2, 5, 6 or A, B, E, F edge 2021
Explanation:
(ignore this I had to put this so that it would add my answer)
Texas Corporation is undergoing a complete liquidation and distributes land to Robert, one of its shareholders, in exchange for all of Robert's stock. The land has a basis of $300,000 and an FMV of $400,000 on Texas Corporation's books and is subject to a $325,000 liability. Robert assumes the liability on the property. Robert's basis in his Texas Corporation stock is $100,000. What is the amount of gain or loss recognized by Robert on the distribution?
a. $25,000 gain
b. $75,000 gain
c. $75,000 loss
d. $25,000 loss
Answer: d. $25,000 loss
Explanation:
Based on the information given in the question, the amount of gain or loss recognized by Robert on the distribution will be gotten by subtracting the liability of $325,000 from the land basis of $300,000. This will be:
= $325,000 - $300,000
= $25,000
This will be a loss since the liability is higher than the asset which is the land basis. Therefore, the amount of loss recognized by Robert on the distribution will be $25,000 loss.
The correct option is D.
Income taxes are taxes levied based on the income you earn. In the U.S., income taxes are progressive, which means that people with higher incomes pay a higher percentage of their income in taxes. Some lawmakers advocate a flat tax, in which every income earner pays the same percentage of income in taxes. A flat tax would significantly reduce the paperwork and rules and regulations associated with the income tax. However, changing the tax rules would cause much disruption in the economy as people changed their economic behavior in response to the change in the tax law.
a. True
b. False
Answer: a. True
Explanation:
Generally when tax rules are changed especially so drastically, people will indeed change their economic behavior in response and this will cause disruption in the economy.
In this scenario for instance, a flat tax would be more damaging to the rich that to the poor so a lot of the poor might lose their incentive to work knowing that so much of their earnings are being taken. They may also find ways to avoid paying taxes in general.
Which of the following best shows how the farmer’s records can help develop an accurate yield estimate in the scenario below?
A farmer has been keeping a complete crop nutrient management plan (CNMP) for the past decade.
A.)the CNMP provides previous years’ best timing, indicating optimal planting and harvest times
B.)the CNMP provides the farmer information on what inputs have been effective previously
C.)the CNMP records exact information regarding property and prior yield, allowing precise estimates
D.)the CNMP records prior estimated crop yields, allowing the farmer to average previous estimates
Answer:
A
Explanation:
Question 7 of 10
How does fractional reserve banking increase the money supply?
O A. By automatically converting foreign currencies into U.S. dollars on
deposit
O B. By guaranteeing that all deposits are held in reserve as cash at all
times
O C. By using deposited money to make loans without reducing the
value of the deposits
O D. By giving banks the authority to print their own money in an
economic emergency
SUBMIT
Answer: C. By Using deposited money to make loans without reducing the value of the deposits
Explanation:
A.P.E.X
Answer:
c
Explanation:
Megans personal information is shown below according to the following table what is her hypothetical credit score
Answer: Sherry's credit score is 390
Explanation:
You did not include Megan's details so I used a reference question and you can answer with your details looking at how I answered this one.
Sherry personal information is shown below . age 26 .time of address 3 years .age of auto 9 years .car payment none. Housing cost 750 .checking and saving accounts checking only . Finance company reference no . Major credits cards 4 .ratio of debt to income 22% . Declared bankruptcy never .according to the following table what is her credit score
Option Points Allocated based on table
Age 26 20
Time of address 3 20
Age of Auto 9 0
Car Payment None 72
Housing Cost 750 48
Checking and Saving accounts Checking only 8
Finance company reference No 60
Major credits cards 4 60
Ratio of debt to income 22% 0
Declared bankruptcy Never 102
Total 390
The next dividend payment by Skippy, Inc., will be $2.95 per share. The dividends are anticipated to maintain a growth rate of 4.8 percent, forever. If the stock currently sells for $53.10 per share, what is the required return?A) 2.67%
B) 5.56%
C) 4.80%
D) 10.36%
E) .27%
Answer:
the correct option is D. 10.36%
Explanation:
The computation of the required return is shown below:
As we know that
Current Price = Expected Dividend ÷ (Required Return - Growth Rate)
(Required Return - Growth Rate) = Expected Dividend ÷ Current Price
Required Return = (Expected Dividend ÷ Current Price ) + Growth rate
= ($2.95 ÷ $ 53.10) + 4.8%
= 10.36%
hence, the correct option is D. 10.36%
We simply applied the above formula so that the correct value could come
And, the same is to be considered
Why is credit an important part of the economy?
A. It allows people and businesses to pay off expensive purchases
over time.
B. It helps workers find higher-paying jobs that take advantage of
their skills.
C. It encourages businesses to sell products both domestically and
internationally
D. It prevents banks from charging companies interest on long-term
loans.
Answer:
A. It allows people and businesses to pay off expensive purchases
over time.
Explanation:
A credit facility is an arrangement where a buyer obtains goods or services and pays for them over a long time. Credit contrasts cash payment, where the buyer pays make full payment for a product when acquiring it.
Credit allows a business to acquire expensive items and assets. Should a business be in need of something that it cannot afford to pay on a cash basis, it can negotiate favorable credit terms with the seller. Payments for such an item are spread over an agreed period. The buyer pays through small and affordable installments until they clear the debt.