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Howes Inc. purchases $465,300 net in goods per year from its sole supplier on terms of 1/10, net 30. The firm actually pays on day
Howes Inc. purchases $465,300 net in goods per year from its sole supplier on terms of 1/10, net 30. The firm actually pays on day 38. If the firm receives a bank offer of 13% with quarterly compounding, should the firm borrow the bank loan and take the discount or continue to pay on day 38? Assume 365 days a year. Please explain.
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