Loan agreement with bank and begin taking the discount

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Reference no: EM131566107

Simple Simon's Bakery purchases supplies on terms of 1.1/10, net 27. If simple Simon's chooses to take the discount offered, it must obtain a bank loan to meet its short-term financing needs. A local bank has quoted Simple Simon's owner an interest rate of 11.4% on borrowed funds. Should Simple Simon's enter the loan agreement with the bank and begin taking the discount? (Use 365 days for a year)

Simple Simon's can earn an effective rate of % (Round to one decimal place)

Reference no: EM131566107

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