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ABC Limited are reviewing their working and are now evaluating their supplier policy. The current agreement states that if the outstanding account is settled with

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ABC Limited are reviewing their working and are now evaluating their supplier policy. The current agreement states that if the outstanding account is settled with 30 days, a 7,5% discount is granted. Management has approached you to evaluate whether it will be beneficial for the company to pay within 30 days, or to delay terms to 60 days and lose the discount. 4.1 Provide the formula used to calculate the cost of losing the discount. 4.2 Calculate the cost of losing the discount. (5) (5) [10]

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