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Please show the solutions the answers are provided (Problem from Working Capital Management) Problem 1. Papaya purchased a new machine on October 20th, 2003 for

Please show the solutions the answers are provided (Problem from Working Capital Management)

Problem 1.

Papaya purchased a new machine on October 20th, 2003 for 2,000,000 on credit. The supplier has offered terms of 2/10, net 50. The current interest rate the bank is offering is 16 percent. Should the firm take or give up the cash discount, why?

Answer:18.62% TAKE >16%

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