Ashley's Delivery Service is analyzing the credit terms of each of three suppliers, A, B, and C. (a) Determine the approximate cost of giving up the cash discount (assume a 360-day year).
(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.

Question

Ashley's Delivery Service is analyzing the credit terms of each of three suppliers, A, B, and C.  (a) Determine the approximate cost of giving up the cash discount (assume a 360-day year).
(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.

Quizplus · Accepted Answer

The Answer of Ashley's Delivery Service is analyzing the credit terms of each of three suppliers, A, B, and C.  (a) Determine the approximate cost of giving up the cash discount (assume a 360-day year).
(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.

Ashley's Delivery Service Is Analyzing the Credit Terms of Each