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Approximate cost of giving up the cash discount

Question: XieCorp is analyzing the credit terms of each of three suppliers, A, B, and C.

Supplier    Credit Terms
A    1/15 net 40
B    2/10 net 30
C    2/15 net 35

(i) Determine the approximate cost of giving up the cash discount.

(ii) Assuming the firm needs short-term financing, recommend whether or not the firm should give up the cash discount or borrow from the bank at 10 percent annual interest. Evaluate each supplier separately.

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Approximate cost of giving up the cash discount

Reference No:- TGS01451334

Have a Question? (oR Write a Review)

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Approximate cost of giving up the cash discount

Reference No:- TGS01451334

Recent Questions Asked Finance Basics

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