PROBLEM #3-Cash Discounts

We purchased $340,000 worth of merchandise from D. Howard. Their terms are 3/10;n/60.

A) What is the approximate annual rate of interest?

B) How much would we need to pay D. Howard if we pay within 10 days?

C) If we borrow the money from the bank (who charges 8%), how much would we save by borrowing the money to get the cash discount? Assume that we will borrow the money at the last possible moment and that we will wait until the end of the 60 day period to pay back the loan.