Early Payment discount decisions Prairie Manufacturing has four possible suppliers, all of which offer different credit terms. Except for the differences in
credit terms, their products and services are virtually identical. The credit terms offered by these suppliers are shown in the following table:
Note: Assume
a day year.
a Calculate the approximate cost of giving up the cash discount from each supplier.
b If the firm needs shortterm funds, which are currently available from its commercial bank at and if each of the suppliers is viewed separately, which, if any, of
the suppliers' cash discounts should the firm give up
c Now assume that the firm could stretch by days its accounts payable net period only from supplier M What impact, if any, would that have on your answer in
part b relative to this supplier?
Data table
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