Morales Company has a cash flow problem. The company owes its suppliers $300,000 on credit terms of 2/10 net 40, but Morales doesn't have the cash to pay during the discount period. Morales, however, can borrow the $300,000 at annual rate of 24%. Should Morales borrow the money to pay its accounts payable?

a. No, additional borrowing will cost more for interest ($60,000 per year) than the discount is worth.

b. Yes, the effective cost of forgoing the discount is greater than 24%.

c. No, the effective cost of forgoing the discount is equal to 24%, and there are transactions costs associated with borrowing.

d. None of the above.