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A company had purchased merchandise on credit terms 1/5, n/15. Not having sufficient cash to pay within the discount period, the company should: a. Borrow
A company had purchased merchandise on credit terms 1/5, n/15. Not having sufficient cash to pay within the discount period, the company should:
a. Borrow the needed cash at 6% annual interest from a bank in order to be able to pay the vendor within the discount period. | ||
b. Sell an investment on which the company is earning a 40% annual return in order to be able to pay the vendor within the discount period. | ||
c. Let the discount period expire without paying and then pay at the end of the credit period. |
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