cash discount decisions the credit terms for each of three suppliers are shown in th 706803

Cash discount decisions The credit terms for each of three suppliers are shown in the following table. (Note: Assume a 365 day year.)

a. Determine the approximate cost of giving up the cash discount from each supplier.

b. Assuming that the firm needs short term financing, indicate whether it would be better to give up the cash discount or take the discount and borrow from a bank at 15% annual interest. Evaluate each supplier separately using your findings in part a.

c. What impact, if any, would the fact that the firm could stretch its accounts payable (net period only) by 20 days from supplier Z have on your answer in part b relative to this supplier?