A firms current working capital needs amount to $1,000,000. Their supplier grants credit terms of...
90.2K
Verified Solution
Link Copied!
Question
Accounting
A firms current working capital needs amount to $1,000,000. Their supplier grants credit terms of 2/10, net 35. The manager believes that funds will not be available to take advantage of discount. He she believes that there is even a possibility that he/she may not have funds until 25 days past the net date.
A very friendly banker has offered to lend the firm funds at a rate of 15% with a 10% compensating balances. Should he/she borrow the funds and take the discount or should she/he pay when funds become available?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
