a) Explain the credit facility provided by some companies to their customers that allows them to manage their day-to-day liquidity situation (4 marks)

ANSWER a):

b) Calculate the opportunity cost of an invoice that specifies the following conditions, as shown below:

a) conditions: 2.21/10, n/40. (1 mark)

b) conditions: 2.5/10, n/35. (1 mark)

c) conditions: 2.21/20, n/45. (1 mark)

ANSWER b):