Question
1. A supplier is offering your firm a cash discount of 2 percent if purchases are paid for within ten days; otherwise, the bill is
1. A supplier is offering your firm a cash discount of 2 percent if purchases are paid for within ten days; otherwise, the bill is due at the end of 60 days. would you recommend borrowing from a bank at an 18 percent annual interest rate to take advantage of the cash discount offer? Explain your answer.
2.Assume you have been offered cash dicounts on merchanddise that can be purchased from either of 2 suppliers. suppliers A offers trade credi terms of 3/20, net 70, and supplier B offers 4/15, net 80. what is the approximate effective cost of missing the cash discounts from each supplier? if you could not take advantage of either cash discount offer, whcih supplier would you select?
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