Cost of foregoing cash discount


Memo Mate, a manufacturer of phone answering machines, is analyzing the credit terms of three of its suppliers, shown below. Its cost of borrowing from its bank is 14%.

Supplier Credit Terms
1 1/10 net 45
2 2/15 net 30
3 2/10 net 35

From which, if any, of the suppliers should the cash discount be taken, and why?

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Accounting Basics: Cost of foregoing cash discount
Reference No:- TGS072088

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