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How much is the cost of failing to take the discount

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Reference no: EM132885230

Voice Company owes $40,000 to one of its suppliers. The supplier has offered a trade discount of 2/10 net 30. Voice Company can borrow the funds from either of two banks: Metrobank will loan the funds for 20 days at a cost of $400; Chinabank offers a discounted loan for 20 days at a cost of $320.

Problem a. How much is the cost of failing to take the discount?

Problem b. How much is the effective interest rate on each of the loans?

Problem c. Should Voice Company take the cash discount?

Problem d. What bank loan should Voice Company use?

Reference no: EM132885230

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