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