Explore BrainMass

Explore BrainMass

    Cash Discount vs Annual Interest at the Bank

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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

    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.