QUESTION 3: CASE STUDY 3 (10%)

Cole Property Management Company

Cole Property Management Company received a bill for RM103, 500 with payment terms 3/20, n/30. Samantha Cole, the owner of the company, knows that she will not have enough money in her business checking account to pay the bill within 10 days and take the early payment discount. In fact, assume that she has nothing in her account, not a single penny. Samantha has a good credit, so her bank is willing to lend her all the money to pay the bill in 20 days. They charge an interest rate of 8% and they use ordinary simple interest.

1)Assume that on exactly the day that the bill is due (n/30), Samantha will have collected enough money from the renters and buyers in her apartment units to pay either the invoice or a loan.

2)What should she do, borrow the money from the bank or pay the invoice on the 30^th day when she has money in her account?