The Gibson Corp. buys from its suppliers on terms of $3/17,$ net $55.$ Gibson has not been utilizing the discounts offered and has been taking $55$ days to pay its bills. Mr$.$ Guekian, Gibson$$s VP$,$ has suggested that the company borrow from the bank at $23\%$ interest, with a $27\%$ compensating balance, to take advantage of the supplier discounts. Current account balances do not count towards meeting the compensating balance requirement. Answer the following: what is the supplier financing effective cost; should Gibson do what Mr$.$ Guekian is suggesting?

Multiple Choice

supplier financing effective cost is $29\mathrm{.}3\%$; Gibson should not take Guekian$$s suggestion

None of the above$/$below answers

supplier financing effective cost is $31\mathrm{.}51\%$; Gibson should not take Guekian$$s suggestion

supplier financing effective cost is $\%$; Gibson should take Guekian$$s suggestion