Discuss about the certificate of deposit

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Question: A retailer owes a wholesaler $500,000 due in 45 days. If the payment is 15 days late, there is a 1% penalty charge. The retailer can get a 45-day certificate of deposit (CD) paying 6% or a 60-day certificate paying 7%. Is it better to take the 45-day certificate and pay on time or to take the 60-day certificate and pay late with the penalty?

Reference no: EM131781906

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