Joanne Germano works in an accounts payable department of a major retailer. She has attempted to convince her boss to take the discount on the

1/15 net 45

credit terms most suppliers offer, but her boss argues that giving up the

1%

discount is less costly than a short-term loan at

12%.

Prove to whoever is wrong that the other is correct.

(Note:

Assume a 365-day year.)The cost of giving up the cash discount is

(Round to two decimal places.)

Part 2

Who is right in this case?