A firm received an invoice of

$800,000

from a supplier with the terms

(2)/(5)

, Net 40 . It will receive

2%

discount if paying by the 5 th day, or pay the full amount by the

40^(th )

. Day. The firm's cost of capital is

8%

.\ Using the PV of Trade terms, evaluate the decision about taking the discount.\

PV_(D)=( InvoicePrice (1-d))/([1+((i)/(365))( Days )])

A firm received an invoice of $800,000 from a supplier with the terms 2/5, Net 40 . It will receive 2% discount if paying by the 5th day, or pay the full amount by the 40th. Day. The firm's cost of capita is 8%. Using the PV of Trade terms, evaluate the decision about taking the discount. PVD=[1+(365i)(Days)]InvoicePrice(1d)