"10.The Trim Gym recently purchased a new security system for $5,500. The transaction was made on trade credit terms of net 45 days. The billing office has offered the Trim Gym a 0.25 percent discount if the payment is made via ACH. The financial manager at the Trim Gym notes that the ACH provides one day of float, while a check would provide three days of float. The additional float might be helpful because Trim Gyms cost of capital is 9 percent. The transactions costs for each check and ACH are $1 and $0.10, respectively.

a.Determine whether or not the Trim Gym should repay the accounts payable with an ACH or check.

b.At what discount would the Trim Gym be indifferent between the disbursement methods?"