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    Approximate cost of giving up the cash discount

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    Lyman Nurseries purchased seeds costing $25000 with terms of 3/15 net 30 EOM on January 12. How much will the firm pay if it takes the cash discount? What is the approximate cost of giving up the cash discount, using the simplified formula?

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    The terms 3/15 imply that a discount of 3% may be taken. If the cash discount is taken, the amount of discount is 25,000X3%=$750. ...

    Solution Summary

    This solution explains how to calculate the approximate cost of giving up the cash discount.