Compute how much the buyer saved by given strategy

Reference no: EM131974121

Problem

Santa Fe Company purchased merchandise for resale from Mesa Company with an invoice price of $23,100 and credit terms of 3/10, n/60. The merchandise had cost Mesa $15,754. Santa Fe paid within the discount period. Assume that both buyer and seller use a perpetual inventory system.

Assume that the buyer borrowed enough cash to pay the balance on the last day of the discount period at an annual interest rate of 8% and paid it back on the last day of the credit period. Compute how much the buyer saved by following this strategy

Amount borrowed: ___

Number of days of interest: ___

Interest expense: ___

Buyer's net savings: ___.

Reference no: EM131974121

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