FIN222 Ltd purchases supplies on terms of 1/10, net 35. If FIN222 Ltd chooses to take the discount offered, it must obtain a bank loan to afford it. WES bank has quoted an APR of 16% on borrowed funds. (3.5 marks)

i) Once FIN222 Ltd passes the discount period, how much cost will it incur in an annual term?

ii) Calculate the EAR for WES bank.

iii) What should FIN222 Ltd do?

c) Indicate whether the following sentence is True or Fales.

i) If a supplier is offering credit of 1/10 and net 40, and your firm chooses not to take the discount, your firm should pay anytime between day 11 and day 40.

ii) An ageing schedule is useful for accounting recieveable management.