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Finley
Finley, Professor
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• A supplier is offering your firm a cash discount of 2 percent

Resolved Question:

• A supplier is offering your firm a cash discount of 2 percent if purchases are paid for within ten days; otherwise the bill is due at the end of sixty days. Would you recommend borrowing from a bank at an 18 percent annual interest rate to take advantage of the cash discount offer? Explain your answer

• A supplier is offering your firm a cash discount of 2 percent if purchases are paid for within ten days; otherwise the bill is due at the end of sixty days. Would you recommend borrowing from a bank at an 18 percent annual interest rate to take advantage of the cash discount offer? Explain your answer

• bank A offers loans with a 10 percent stated annual rate and a 10 percent compensating balance. You wish to obtain $250,000 in a six month loan.
c. how much must you borrow to obtain $250,000 in usable funds if you currently have $30,000 on deposit at the bank?

d. what is the effective annual rate on a six month loan?
Submitted: 4 years ago.
Category: Multiple Problems
Expert:  Finley replied 4 years ago.
Finley and other Multiple Problems Specialists are ready to help you
Customer: replied 4 years ago.

Can you help me with the second one ? sorry i made a mistake in doubling question one.

Assume that you have been offered cash discounts on merchandise that can be purchased from either of two suppliers. Supplier A offers trade credit terms of 3/20, net 70, while supplier B offers 4/15, net 80. What is the approximate effective cost of missing the cash discouts from each supplier? If you could not take advantage of either cash discount offer, which supplier would you select?

Expert:  Finley replied 4 years ago.
Sorry for the the late reply. I was out over the weekend.

I see this has been answered in another post.

I will close this thread to avoid confusion and duplicate posts.

Thanks.

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