Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your firm just purchased $100,000 in goods from your supplier on trade credit terms of 2/10 net 45. Your opportunity cost of funds is 10%.

Your firm just purchased $100,000 in goods from your supplier on trade credit terms of 2/10 net 45. Your opportunity cost of funds is 10%. What is the present value savings that would be earned if your firm makes the payment on the last day of the discount trade credit period versus the last day of the net trade credit period?

a.

$1,049.90

b.

$1,389.29

c.

$841.84

d.

$1,506.76

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Grow The Pie How Great Companies Deliver Both Purpose And Profit

Authors: Alex Edmans

1st Edition

1108494854,1108849482

More Books

Students also viewed these Finance questions