Suppose now that the supplier in the previous problem offers a 1% discount on orders of 1,800

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Suppose now that the supplier in the previous problem offers a 1% discount on orders of 1,800 units or more. Should MEC accept the supplier's offer?

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Micro-Encapsulator Corp. (MEC) expects to sell 7,200 miniature home encapsulators this year. The cost of placing an order from its supplier is $250. Each unit costs $50 and carrying costs are 20% of the purchase price.

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Fundamentals of Corporate Finance

ISBN: 978-1259024962

6th Canadian edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim

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Question Posted: Nov 14, 2017 02:33 AM

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Suppose now that the supplier in the previous problem offers a 1% discount on orders of 1,800

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If the firm takes the discount it gets the goods at a lower price but it is oblig...View the full answer

Fundamentals of Corporate Finance

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