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Opportunity cost of cash discount

Now if you were a finance manager and several of your suppliers were offering you 2/10 n30, but when it came time to pay the invoice you did not have enough cash in the bank to cover, what would you do?

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I will suggest that the person should borrow from the friend or any other source and it should be less than 37.25%. The opportunity cost is: ...

Solution Summary

This explains the computation of opportunity cost of cash discount through a simple example.

$2.19