Which lender should johnnys pizza use

Reference no: EM13267861

Johnny's Pizza owes $40,000 to one of its suppliers. The supplier has offered a trade discount of 2/10 net 30. Johnny's can borrow the funds from one of two lenders. Lender 1 will fund for 20 days at a cost of 400$; Lender 2 offers a discount for 20 days at a cost of 320$.

1) What is the cost of failing to take the discount?

2) What is the effective IR (Interest Rate) on each loan?

3) Should Johnny's take the cash discount?

4) Which Lender should Johnny's Pizza use?

Reference no: EM13267861

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