Which of the following statements is (are)true?
(i)A merchant receives an invoice for $10,000 with terms 4/30,n/90.He/she should not take advantage of the discount if he/she can borrow money at r = 20%
(ii)A 60-day promissory note has a maturity value of $5000.Its price 30- days before maturity,at a rate of simple discount d = 4%,is $4983.56
A)Both are true
B)(i)only
C)(ii)only
D)Neither are true

Question

Quizplus · Accepted Answer

The discount rate for the invoice is effectively higher than the borrowing rate, so the merchant should take the discount. The calculation for the promissory note shows that its price 30 days before maturity at a 4% discount rate is indeed $4983.56.

Which of the Following Statements Is (Are)true