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Simmons Corp. can borrow from its bank at 17 percent to take a cash discount. The...

Simmons Corp. can borrow from its bank at 17 percent to take a cash discount. The terms of the cash discount are 2.5/14, net 40.  
  
a. Compute the cost of not taking the cash discount. (Use a 360-day year. Do not round intermediate calculations. Input your final answer as a percent rounded to 2 decimal places.)
  

Cost of not taking a cash discount.......%

   
    
b. Should the firm borrow the funds?
  

No
Yes
business   finance   
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Answer #1

a Cost lost - discount :. X 360 days due date - discound 100 - discount I period 2 .5 - x 360 100%-2.5% 40-14 x 2.5 97.5% 360

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