Costco buy products from Kirkland manufacturer. Kirkland offer Costco 1/10, n/50 to pay its $1,000 invoice. Costco can borrow money from the bank at annual interset rate of 8%.

Required:

1) What is the effective interest rate of the discount ? % *** Round to 2 decimal (ie 12.4 --> 12.40)

2) Should Costco borrow money from bank and pay early ? Yes or No