Question
Messy Inc. purchased a new machine on January 20th, 2019, for $1,000,000 on credit. The supplier has offered M. terms of 3/10, net 55. The
Messy Inc. purchased a new machine on January 20th, 2019, for $1,000,000 on credit. The supplier has offered M. terms of 3/10, net 55. The current interest rates the bank is offering is 20 percent. (Assume a 360-day year.)
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Compute the cost of giving up cash discount.
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Should the firm take or give up the cash discount?
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley Eakins
6th International Edition
0321552113, 9780321552112
