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    Cash Discount vs Annual Interest at the Bank

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    Lets say company A is analyzing the following:

    It costs them 25.5% if they give up a cash discount that is being offered by a supplier.

    The local bank offers them an annual interest of 14%.

    What should they do? Take the discount? or Take the local bank's loan of 14%?

    © BrainMass Inc. brainmass.com June 4, 2020, 12:44 am ad1c9bdddf
    https://brainmass.com/business/auditing/cash-discount-annual-interest-bank-356185

    Solution Preview

    The company should avail the discount and if it does not have money to pay borrow the money@ 14% from the bank to ...

    Solution Summary

    The solution decides whether to take cash discount or invest the said amount at the bank.

    $2.19

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