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Calculate the annual cost of not taking the discount

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Reference no: EM133205529

A company gets trade credit from its supplier. The company purchases $1000 of goods.

Using the formula for the annual cost of not taking the discount, k=d%/(100%-d%) x 365/(f(date) - d(date))

a) It receives terms 2/15, net 35 days.

i) What will they pay in 5 days?

ii) Calculate the annual cost of not taking the discount.

b) Calculate the annual cost of not taking the discount for the following options and pick the better option for the company and explain why.

i) 2/10, net 20

ii) 2/10, net 40

Reference no: EM133205529

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